BlackRock Urges OCC to Drop 20% Cap on Tokenized Reserves

BlackRock filed a 17-page comment letter with the Office of the Comptroller of the Currency on Friday, asking the agency to remove a proposed 20% cap on tokenized reserve assets for GENIUS Act payment stablecoin issuers. The firm said the limit would constrain its $2.6 billion BUIDL fund and similar products.

In the letter, BlackRock argued that reserve risk depends on liquidity, duration and credit quality, not on whether an instrument is tokenized. The firm proposed a principles-based diversification framework so issuers could manage reserves by risk characteristics rather than an absolute tokenization threshold.

BlackRock said its BUIDL fund currently backs about 90% of the shares of Jupiter’s JupUSD and Ethena’s USDtb. The company warned the 20% cap would materially limit BUIDL’s ability to scale as a primary backing for federally regulated stablecoins. BlackRock also requested formal guidance on whether Treasury exchange-traded funds qualify as eligible reserves and asked that such ETFs be treated the same as government money market funds.

The OCC’s draft rule offers two reserve-diversification options. BlackRock expressed support for Option A but proposed revisions, including exempting self-managed money market shares from a 40% concentration threshold, allowing same-day settlement funds to meet liquidity requirements, and adding shorter-maturity Treasury floating-rate notes to the eligible list.

BlackRock said Option B would require stringent daily compliance, with a 40% single-entity exposure cap and a 20-day weighted maturity limit across issuers. The firm argued those constraints could restrict issuers’ ability to manage liquidity effectively.

The asset manager also asked the OCC to establish a clearer, structured process for approving reserve instruments. Without clearer rules, BlackRock warned, issuers may avoid holding ETFs and other instruments that could later be questioned by regulators.

Other stakeholders have submitted comments on the broader regulatory package. The Brookings Institution urged higher capital requirements for reserves held in uninsured demand deposit accounts. In April, the Federal Deposit Insurance Corporation proposed a framework for stablecoin issuers and FDIC counsel Chantal Hernandez noted it would “clarify deposit insurance coverage of deposits that serve as reserve assets.” Treasury, FinCEN and OFAC proposed rules aimed at countering terrorist financing and strengthening anti-money-laundering controls; Treasury Secretary Scott Bessent wrote the proposals would “protect the US financial system from national security threats without hindering American companies’ ability to forge ahead in the payment stablecoin ecosystem.”

After the GENIUS Act became law in July, several firms adjusted funds and operating models to comply. BlackRock redesigned its BlackRock Select Treasury-Based Liquidity Fund to align with the legislation, adding a 5 p.m. ET cutoff for same-day processing and shifting to a conservative, Treasury-focused investment mix for stablecoin reserves.

BlackRock’s filing asks the OCC to revise the draft rule, clarify which Treasury-based instruments qualify as reserves and adopt a transparent asset-approval process so issuers can design reserve programs that meet the law’s requirements.