What to know:
- BlackRock urges OCC to remove 20% cap on tokenized reserves under the GENIUS Act framework.
- Firm says BUIDL fund with $2.6B assets and USYC $2.9B need broader eligibility rules.
- BlackRock seeks ETF reserve clarity, safe harbor expansion, and inclusion of Treasury notes.
BlackRock has urged the U.S. Office of the Comptroller of the Currency to revise proposed rules under the GENIUS Act, calling for the removal of a 20% cap on tokenized reserve assets. The firm argues that broader eligibility would better support innovation, institutional adoption, and development of a blockchain-based financial infrastructure framework.
The demand comes as part of the wider GENIUS Act regulatory framework, set by the OCC for regulating payment stablecoin issuers. BlackRock pointed out that limiting tokenized assets might adversely impact the firm’s products, including its BUIDL fund, and slow down institutional adoption in the space. The firm also emphasized that the current restrictions could hinder innovation and slow down the development of blockchain-based financial infrastructure.
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BlackRock Challenges Tokenized Reserve Caps
BlackRock submitted a 17-page letter to the OCC ahead of the deadline, which was set at the end of the agency’s 60-day consultation period. Reserve risks should be evaluated on the basis of credit quality, liquidity, and maturity of assets instead of being issued or transferred through blockchain technology.
BlackRock employs a tokenization strategy that includes the BUIDL fund, with about $2.6 billion in assets used as collateral. The product helps build stablecoin infrastructure through stablecoin projects like Ethena USDtb and Jupiter JupUSD based on Solana. Circle’s USYC is leading the market, managing assets amounting to roughly $2.9 billion.
Stablecoin Reserve Rules Face Institutional Scrutiny
BlackRock’s letter also addressed other key aspects of stablecoin regulation, such as treasury exchange-traded fund eligibility. Specifically, the firm recommended that the GENIUS Act reserve rules recognize all types of ETFs as eligible assets under Section 4. Regulatory ambiguity, in its opinion, could dissuade stablecoin issuers from owning ETFs and calls for expanding safe harbor protection, similar to that given to government money market funds.
BlackRock expressed support for Option A, which is based on principles with an optional safe harbor, in regard to the diversity requirement. BlackRock’s recommendation included removing self-custodied fund shares from the concentration requirements and allowing same-day settlement money market funds as eligible for the weekly liquidity requirement.
BlackRock further recommended adding short-term U.S. Treasury floating-rate notes and establishing a transparent process for approving additional eligible reserve assets. The letter, signed by senior regulatory executives, comes as the firm positions its BSTBL fund for GENIUS compliance amid overlapping OCC, FDIC, and federal stablecoin rulemaking timelines and ongoing regulatory coordination.
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