The GENIUS Act Is Here — What Changes for Stablecoins? w/ Jonathan Gould, U.S. Comptroller of the Currency

Jonathan Gould · Office of the Comptroller of the Currency (OCC)

Stablecoin issuance is part of the business of banking, which Congress endorsed and regulators should welcome.

Gould argues that welcoming payment stablecoin activity into the banking system is the regulator's job, because it is part of the business of banking. He says Congress has endorsed this and set the framework for it, and the OCC is bringing these activities into a regulated framework for the first time. He sees this as central to ensuring American leadership in the area.

“It is part of the business of banking, as I've said on multiple occasions, as congress has endorsed and set the framework for.”at 4:24

Jonathan Gould · Office of the Comptroller of the Currency (OCC)

Payment stablecoins will bring faster, cheaper cross-border payments and real customer benefits.

Gould believes payment stablecoins will deliver faster speed, particularly in cross-border payments, and expects real benefits to customers over the short to medium term. He also argues the US payment system has not been optimal over recent decades, so stablecoins are an upgrade to that infrastructure. He ties the benefit to customers getting faster and cheaper payments than they otherwise would.

“I believe it will deliver a kind of faster speed, particularly in areas like cross border payments... So I think we will see kind of hopefully over the short to medium term real benefits to customers.”at 4:38

Jonathan Gould · Office of the Comptroller of the Currency (OCC)

Liquid reserve assets must back stablecoins so redemptions can be met; this is core to stability.

Gould says reserve requirements are a core foundation of the regulation because they define what it means to be a stablecoin, with stability as the key word. He draws an analogy to the OCC's 1863 mandate to ensure bank notes were backed by assets matching their face value. The OCC's focus is liquidity risk: issuers must hold assets that can be liquidated in the short term to meet redemption requests, and the rules set out details around that.

“that there are assets that can be liquidated in the short term to make sure they're meeting the redemption requests or the volume of redemption requests.”at 7:28

Jonathan Gould · Office of the Comptroller of the Currency (OCC)

Too early to ban third-party or affiliate stablecoin rewards; will judge case by case after applications.

The proposal used a rebuttable presumption to test how to enforce the ban on yield and rewards. Gould says comments from community bankers and industry showed it is premature to draw ex ante lines on which third-party or affiliate relationships are prohibited. He wants to see concrete applications and business plans starting January 18 before deciding which structures look problematic and which look acceptable. The final rule reverts to the statutory language, with case-by-case review.

“it would be premature to start drawing lines in the sand now as to what relationships with third parties or what relationships with affiliates are kind of ex ante prohibited.”at 15:41

Jonathan Gould · Office of the Comptroller of the Currency (OCC)

Stablecoin transparency and auditability make them a valuable tool for anti-money-laundering enforcement.

Gould argues that the ability to track global payments has implications for Bank Secrecy Act and anti-money-laundering enforcement. Banks and other supervised institutions are expected to know their customers and act as eyes and ears for law enforcement. He says payment stablecoins, given their transparency and auditability, are extremely valuable in that regard and a tool of US government policy.

“payment stablecoins, given its transparency, given just the very nature of it and the auditability of it, is extremely valuable in that regard as well as a tool of US government policy.”at 21:39

Jonathan Gould · Office of the Comptroller of the Currency (OCC)

Payment stablecoins will reinforce and extend US dollar dominance and create demand for Treasuries.

Gould argues US dollar dominance is central to the future and that the dollar's global market infrastructure is built around it. He says payment stablecoins are a mechanism to grow that dominance and export it further, which benefits the US beyond its borders. He agrees with the interviewer that this creates demand for US Treasury securities, a point he endorsed as absolutely right.

“This is very important when we talk about US dollar dominance over the over the future... So payment [stablecoins] are a mechanism for growing that, ensuring that that is important, not just obviously to The US, but even beyond.”at 5:00