BlackRock Urges OCC to Drop Tokenized Reserve Cap, Expand Eligible Assets in GENIUS Act Comment Letter

The asset management giant pushes back on proposed restrictions it says could hamper stablecoin reserve innovation without improving safety

BlackRock, the world’s largest asset manager, has formally asked the U.S. Office of the Comptroller of the Currency (OCC) to abandon a proposed cap on tokenized reserve assets, arguing the restriction is unnecessary and could stifle one of the fastest-growing corners of the digital asset market — without making stablecoins any safer.

The firm submitted a 17-page comment letter to the OCC on May 1, 2025, landing on the final day of the agency’s 60-day public comment window. The letter focuses on proposed rules implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act — the landmark federal stablecoin legislation signed into law by President Trump last July — and specifically targets provisions governing what assets federally chartered stablecoin issuers, known as permitted payment stablecoin issuers (PPSIs), may hold in reserve.

What Is the GENIUS Act and Why Does It Matter?

Before diving into BlackRock’s objections, it helps to understand the regulatory landscape. The GENIUS Act created the first comprehensive federal framework for payment stablecoins — digital tokens pegged to a stable value, most commonly the U.S. dollar. To issue a stablecoin under the law, a company must obtain federal or state authorization and back every token in circulation with high-quality liquid assets. The goal is to ensure that stablecoin holders can always redeem their tokens at face value, even in a market stress event.

The OCC is now in the process of writing the detailed rules that flesh out exactly what “high-quality liquid assets” means. Its 376-page draft proposal, published in the Federal Register on March 2, included more than 200 questions soliciting public feedback — and it attracted significant attention from financial institutions with a stake in the outcome.

The 20% Cap BlackRock Wants Gone

The most contentious element BlackRock targeted is a proposed 20% ceiling on tokenized reserve assets. The OCC floated this threshold as a potential guardrail on how much of a stablecoin issuer’s reserves could be held in tokenized form — meaning assets that exist on a blockchain rather than in traditional custodial accounts.

BlackRock called the cap “extraneous” to the OCC’s regulatory objectives. In its letter, the firm argued that what makes a reserve asset risky or safe has nothing to do with whether it lives on a distributed ledger. Instead, risk is driven by three well-understood factors: credit quality (the likelihood the issuer will be paid back), duration (how long until the asset matures, which affects sensitivity to interest rate changes), and liquidity (how quickly and at what cost the asset can be converted to cash). A tokenized U.S. Treasury bill, BlackRock argued, carries the same risk profile as a non-tokenized one — because it is, fundamentally, the same underlying asset.

BlackRock is urging the OCC to drop a proposed 20% cap on tokenized reserve assets

Why BlackRock Has Skin in the Game

This is not merely a matter of regulatory philosophy for BlackRock. The firm operates BUIDL, one of the largest tokenized Treasury funds in the world, with approximately $2.6 billion in assets under management. BUIDL supplies more than 90% of the reserves backing two prominent stablecoins: Ethena’s USDtb and Jupiter’s JupUSD, a Solana-based product. If the OCC’s 20% cap were to take effect under the GENIUS Act framework, BUIDL’s ability to grow as a reserve asset for federally regulated stablecoins would be materially constrained — cutting off a major distribution channel for one of BlackRock’s flagship digital asset products.

BlackRock’s involvement in the stablecoin ecosystem goes further. In October 2024, the firm retooled its Select Treasury Based Liquidity Fund (BSTBL) to align with GENIUS Act requirements, giving it a 5 p.m. ET trading deadline and a conservative, Treasury-heavy mandate designed specifically to serve stablecoin issuers looking for compliant reserve products.

The firm’s BUIDL fund holds nearly $2.6 billion in assets (Source: RWA.xyz).

Treasury ETFs: Clarification Needed

Beyond the tokenization cap, BlackRock urged the OCC to explicitly confirm that exchange-traded funds (ETFs) investing solely in eligible reserve assets — such as Treasury ETFs — qualify as lawful reserves under Section 4 of the GENIUS Act. The firm warned that the current draft’s ambiguity on this point could cause PPSIs to avoid ETFs altogether, even when those funds hold nothing but government securities that would individually qualify as reserves.

BlackRock also called for eligible Treasury ETFs to receive the same quantitative safe harbor treatment that government money market funds (MMFs) currently enjoy under the proposal — meaning they would be automatically presumed to satisfy reserve quality standards rather than requiring case-by-case analysis.

Diversification Framework: Option A Over Option B

The OCC’s draft offered two approaches to reserve diversification requirements. BlackRock backed “Option A,” which pairs a principles-based standard with an optional quantitative safe harbor. Option B, by contrast, would make strict quantitative limits mandatory for all issuers every day, including a 40% single-institution concentration cap and a 20-day weighted average maturity ceiling.

BlackRock argued Option B’s rigid daily compliance requirements could force issuers into suboptimal reserve management decisions based on arbitrary numerical thresholds rather than sound risk management. Option A’s flexibility, the firm contended, allows issuers to manage reserves in a way that reflects actual market conditions.

Even within Option A, BlackRock proposed several technical refinements. It asked the OCC to exclude “self-custodied” government money market fund shares from the 40% concentration limit, clarify that PPSIs don’t need to look through fund holdings to apply concentration limits to a fund’s custodians or service providers, and allow same-day-settlement government MMFs to count toward the 30% weekly liquidity requirement.

Expanding the Eligible Asset List

BlackRock also recommended that the OCC add U.S. Treasury floating-rate notes with up to two years of remaining maturity to the list of eligible reserve assets. These instruments carry limited price volatility because their coupons reset weekly in line with prevailing rates, making them well-suited to stable-value reserve portfolios. The firm further urged the agency to establish a formal, transparent process for evaluating additional assets for eligibility in the future — a procedural safeguard against the list becoming outdated as financial markets evolve.

Broader Context

BlackRock was not alone in filing on the deadline. The Brookings Institution submitted its own letter focused on capital requirements, arguing the OCC should impose higher capital charges on uninsured demand deposits held as stablecoin reserves.

The OCC’s rulemaking is one of several running in parallel. The FDIC advanced its own proposed stablecoin framework in early April. The Treasury Department, the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC) have separately proposed rules covering anti-money laundering programs and sanctions compliance. All are converging on a January 2027 compliance deadline.

The letter was signed by Roland Villacorta, BlackRock’s global head of liquidity and financing, and Benjamin Tecmire, head of U.S. regulatory affairs.

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