BlackRock Submits Comment Letter on GENIUS Act: "Abolish Tokenized Reserve Cap and Expand Eligible Assets"

BlackRock has filed a formal objection to the U.S. Office of the Comptroller of the Currency (OCC)'s proposed rulemaking for the "Guiding and Establishing National Innovation in Stablecoins Act (GENIUS Act)." During the public comment period that concluded on May 1, 2026, BlackRock strongly criticized the regulator's plan to limit the proportion of tokenized assets within stablecoin reserves to 20%.

Analysis suggests that such regulatory constraints could hinder the growth of institutional blockchain financial products, such as BlackRock's 'BUIDL' fund. BlackRock, the world's largest asset manager, argued that while tokenization technology can enhance the efficiency of the financial system, imposing an artificial cap is an unnecessary barrier that delays institutional adoption.

The GENIUS Act rulemaking being pursued by the OCC aims to establish a comprehensive federal regulatory framework for 'Permitted Payment Stablecoin Issuers (PPSI).' Through this notice of proposed rulemaking, the regulator sought industry feedback by posing over 200 specific questions to create a safe and sound stablecoin ecosystem. Acting Comptroller Jonathan V. Gould stated that he welcomes broad industry feedback to create a practical and effective final rule.

The proposal for a 20% cap on tokenized reserves should be withdrawn, and the scope of eligible assets that stablecoin issuers can hold should be expanded to ensure both market innovation and stability simultaneously.

BlackRock particularly emphasized that on-chain money market funds, such as its BUIDL fund, can serve as stable reserve assets for stablecoins. It pointed out that the currently proposed 20% cap could make liquidity management difficult for institutional investors in the process of transitioning to blockchain-based financial infrastructure. BlackRock added that regulators should maintain a technology-neutral stance and recognize the value of tokenized High-Quality Liquid Assets (HQLA).

Definition of Reserve Assets and Operational Constraints

Under the current OCC proposal, stablecoin reserve assets are limited to a very narrow range of highly liquid assets. These include U.S. dollar cash, Federal Reserve deposits, short-term Treasuries with a remaining maturity of 93 days or less, and repurchase agreements (RP) backed by Treasuries. BlackRock argued that this list of assets is overly conservative and should broadly accommodate tokenized forms of Treasuries or other safe assets.

• U.S. Dollars and Fed Deposits: Immediately available assets including physical cash and central bank balances
• Short-term Treasuries: U.S. Treasury securities with a remaining maturity of 93 days or less
• Repurchase Agreements: Overnight repo and reverse repo transactions backed by Treasuries
• Insured Deposits: For large issuers, 0.5% of total reserve assets must be deposited in insured financial institutions

Operational regulations for large-scale issuers have also emerged as a major market concern. PPSIs with an outstanding balance of $25 billion or more must maintain at least 0.5% of total reserve assets as insured deposits every business day, with this amount capped at $500 million. Concerns have been raised that these regulations could cause friction in the daily operations of systemically important issuers and reduce the flexibility of fund management.

In addition to BlackRock, major financial and crypto organizations such as Paradigm and the Bank Policy Institute (BPI) submitted comment letters reflecting their respective positions by the May 1, 2026 deadline. Paradigm requested clear clarification on the possibility of overlapping regulatory requirements, while BPI emphasized the balance between innovation and financial stability. While the industry generally agrees on the need for unified federal regulation, there were differences in perspective between traditional finance and crypto companies regarding detailed implementation plans.

The GENIUS Act rulemaking is expected to be a significant turning point that will determine the competitive landscape of the stablecoin issuance market among banks, fintech companies, and asset managers. If the OCC accepts BlackRock's proposal and abolishes the tokenized asset cap, the on-chain fund market, such as BUIDL, is expected to show explosive growth. Conversely, if the regulation is finalized as originally proposed, the pace of institutional adoption of blockchain finance is likely to be slower than initially expected.

The ball is now in the OCC's court. The OCC is expected to finalize and announce the Final Rule after carefully reviewing the industry feedback collected. Market participants are closely watching the regulator's next move, particularly focusing on whether the 20% tokenization cap will be revised and whether the scope of eligible reserve assets will be expanded.