MSBA Comments on Proposed Rule — Implementing the Guiding National Innovation for U.S. Stablecoins by Entities Subject to the Jurisdiction of the OCC (RIN 1557-AF41)

The MSBA answered several questions relevant to our members. Below is a summary of the key points in our letter.

1. Regulatory Clarity on Definitions and Permitted Activities The MSBA recommends that the OCC sharpen key GENIUS Act definitions, including by aligning certain terms with existing bank standards or providing explicit exclusions. We also recommend that the OCC clarify, with examples, which activities PPSIs may conduct as principal or agent and where PPSI authority ends and DASP activities begin, including by offering an approval or non‑objection process for novel or evolving use cases.
2. Principles-Based, Tailored Regulation Over Rigid Quantitative Rules The MSBA strongly favors Option A (principles-based with an optional safe harbor) over Option B (fully prescriptive quantitative requirements) for reserve asset diversification. We argue that rigid one-size-fits-all standards unfairly disadvantage smaller and de novo entrants while embedding the operating profiles of large incumbents as the baseline for everyone.
3. Right-Sizing Capital and Backstop Requirements to Avoid Disproportionate Burden on New Entrants The MSBA argues that the proposed 12-month operational backstop tied to total expenses is excessive — especially for de novo PPSIs with front-loaded technology and infrastructure costs. We recommend reducing the horizon to 6 months and redefining the expense base to reflect only wind-down and continuity costs, with the OCC using its individual authority under § 15.42 to impose higher requirements where a specific issuer's risk profile warrants it.