OCC does not believe the GENIUS Act creates a new charter type

It seems the OCC does not believe the GENIUS Act creates a new charter type, contrary to speculation late last year. They would, however, be pleased to offer applicants charters they already have.

In the preamble to its proposed GENIUS Act rule, the OCC adopts a narrower reading than it could have of the savings clause that follows the Act's list of activities permitted to a stablecoin issuer.

The savings clause says that nothing in the activities provision "shall limit a permitted payment stablecoin issuer from engaging in payment stablecoin activities or digital asset service provider activities specified by this Act, and activities incidental thereto, that are authorized by the primary Federal payment stablecoin regulator or the State payment stablecoin regulator, as applicable, consistent with all other Federal and State laws[.]"

You could read this language to give stablecoin regulators the power to authorize issuers to engage in any "digital asset service provider activities," which include quite a lot of non-stablecoin-related activities. This possible reading led to speculation that the GENIUS Act effectively created a new charter type.

In the preamble, the OCC makes clear that it does not agree with that broader reading of the law. The savings clause, the OCC argues, merely "clarifies the scope of" the activities provisions "rather than, for example, providing an independent grant of authority."

According to the OCC, "the phrase 'consistent with all other Federal and State laws' indicates that the 'digital asset service provider activities' and 'activities incidental thereto' must be consistent with a grant of authority provided for in another Federal or State law . . . [and] must be independently authorized under another source of applicable law." (emphasis added)

This position might seem out of character for the OCC, which is usually generous (if not aggressive) in interpreting the statutes governing bank powers. But both roads lead to the same destination: more OCC charters.

After all, if someone is already applying to the OCC for the right to issue stablecoins, the most obvious "independent grant of authority" is a national trust bank charter. And if other parts of the OCC's rule are finalized as proposed, the lift to charter and operate an NTB might not seem that much greater than the lift for a "bare" federal PPSI license. (With the very important exception of affiliate transactions -- but more on that later.)