BlackRock Pushes Back on Stablecoin Reserve Limits Under GENIUS Act

BlackRock has formally challenged key elements of proposed U.S. stablecoin rules, urging regulators to avoid strict limits on tokenized reserve assets in a move that could shape the future of digital dollar infrastructure.

The asset management giant submitted a 17-page comment letter to the Office of the Comptroller of the Currency (OCC) on the final day of its 60-day consultation window, addressing draft rules designed to implement the GENIUS Act.

Table of Contents

Key Dispute: Tokenized Reserve Cap

At the center of the debate is a proposed 20% cap on tokenized reserve assets for payment stablecoin issuers (PPSIs).

BlackRock strongly opposed this idea, calling it unnecessary and misaligned with actual risk factors. The firm argued that:

Risk depends on credit quality, duration, and liquidity
The technology layer (blockchain vs traditional) should not determine risk treatment
A hard cap could limit innovation and efficiency in reserve management

This stance is significant given BlackRock’s growing footprint in tokenized assets.

Why This Matters: Tokenization at Scale

BlackRock’s BUIDL fund, a tokenized U.S. Treasury product, has become a major player in the market:

Nearly $2.6 billion in assets
Provides over 90% of reserves for stablecoins like Ethena’s USDtb and Jupiter’s JupUSD

A strict cap on tokenized reserves could directly constrain the growth of such products under federal regulation.

ETF Inclusion: Another Key Ask

BlackRock also urged regulators to clarify that Treasury-backed ETFs qualify as eligible reserve assets under the GENIUS Act.

The firm warned that ambiguity could:

Discourage stablecoin issuers from holding ETFs
Limit diversification options
Reduce capital efficiency

It requested that qualifying ETFs receive the same regulatory treatment as government money market funds.

Reserve Framework: Flexible vs Rigid Rules

BlackRock backed the OCC’s “Option A” approach, which offers:

A principles-based framework
An optional quantitative safe harbor

It opposed stricter alternatives that would impose rigid daily requirements, such as:

40% concentration limits per institution
20-day maturity caps

The firm argued flexibility is essential for managing reserves effectively in real-world conditions.

Additional Recommendations

BlackRock proposed several technical adjustments to improve the framework:

Exclude certain self-custodied fund holdings from concentration limits
Allow same-day settlement funds to count toward liquidity requirements
Add U.S. Treasury floating-rate notes (up to 2 years maturity) as eligible assets
Create a transparent process for adding new reserve assets over time

Strategic Positioning for Stablecoins

The timing of the letter reflects BlackRock’s broader strategy to become a key infrastructure provider for stablecoin issuers.

The firm has already adapted products like its Treasury-based liquidity funds to align with GENIUS Act requirements, signaling long-term commitment to the sector.

Broader Regulatory Landscape

The OCC proposal is part of a wider regulatory push ahead of a January 2027 compliance deadline, alongside efforts from:

Federal Deposit Insurance Corporation (FDIC)
Financial Crimes Enforcement Network
Office of Foreign Assets Control

These initiatives aim to define rules around capital, custody, anti-money laundering, and sanctions compliance for stablecoins.

Outlook: Regulation vs Innovation

BlackRock’s intervention highlights a growing tension in crypto regulation:

Regulators: Focused on risk control and financial stability
Industry: Pushing for flexibility to enable innovation

The final rules will likely determine how quickly tokenized finance and stablecoins scale in the U.S.

If regulators adopt a more flexible approach, it could accelerate institutional adoption. If not, stricter limits may slow growth and push innovation to other jurisdictions.

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Screener Links — BlackRock (BLK) & Related Asset Management Ecosystem

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