US quietly eases stablecoin reserve rules as banks warn billions could shift away from lending

The US government is moving to formalize a new class of regulated payment stablecoins, a system Treasury Secretary Scott Bessent has compared to the National Currency Act of 1863. On Oct. 21, the Office of the Comptroller of the Currency (OCC) released a 721-page final rule that sets the standards for these digital dollar issuers.

Bessent hailed the move as a cornerstone of America's position as the world's crypto capital. The rule establishes a framework for issuers to back their tokens with reserves, but it also contains significant changes to how those reserves must be held.

The American Bankers Association (ABA) responded the same day, arguing that the final rule creates room for indirect stablecoin rewards and invites deposit flight. The ABA contends that the changes will weaken bank lending by making stablecoins more attractive to depositors.

The OCC kept the statute's ban on issuers paying interest or yield for holding or using their tokens in place. However, the agency dropped a proposed rebuttable presumption aimed at rewards routed through affiliates and intermediaries, opting instead for a case-by-case review of such arrangements.

The most significant changes concern the liquidity requirements for stablecoin reserves. The OCC cut the minimum immediately available liquidity from 10% of reserves to 5%. It also removed a proposed allocation of 0.5% of reserves, capped at $500 million, for issuers with at least $25 billion outstanding.

A separate restriction that capped required daily liquidity at 50% in any one eligible institution was also dropped. The agency declined to require issuers to place reserves with community banks, leaving the decision to the issuers themselves.

Full backing remains in place, with reserve value required to match outstanding issuance. A hypothetical issuer with $100 billion of stablecoins would see its immediate-liquidity floor fall from $10 billion to $5 billion, and its separate $500 million insured-deposit requirement fall to zero.

The OCC expects issuers to monetize assets quickly and submit to stress testing. The agency argued that high-quality assets, including Treasury securities, can be sold quickly, and spreading insured deposits across many institutions adds operational complexity, counterparty exposure, and settlement-access constraints.

The agency identified two risks pointing in opposite directions for community banks. Local banks could lose deposits to stablecoins, and large issuer balances could carry their own liquidity risks. The OCC declined to require the relationship for either side.

A Federal Reserve paper by Jessie Jiaxu Wang from December 2025 describes three paths for a $1,000 customer move from checking into a stablecoin. If the issuer holds bank deposits, the money may land at another bank, and aggregate deposits stay largely intact.

If the issuer buys Treasury bills, the proceeds may return to bank accounts through later transactions. If the buyer is overseas, the issuer may bring new dollar funding into the US system. The New York Fed's February 2026 study by Michael Junho Lee and Donny Tou tracked banks that began servicing a stablecoin issuer.

Their interbank payment activity rose 67% over nine months, their reserve balances rose about $1.5 billion, and their loan share of assets ran 14 percentage points below that of comparable banks. Reserve volatility climbed 55% for a one-standard-deviation increase in primary-market activity.

The White House Council of Economic Advisers’ (CEA) September model estimates that an effective yield ban would raise bank lending by $2.1 billion in the baseline, about 0.02% of loans, and by $531 billion under stacked extreme assumptions. The CEA models a policy ban, and the New York Fed measures observed balance sheets, so the two address different margins.

The rule takes effect Jan. 18, 2027, alongside the GENIUS Act, and anti-money-laundering requirements go through separate rulemaking. Global stablecoin supply stood at $301 billion on Oct. 21, according to DeFiLlama.

If issuers build bank relationships for custody, payments, and reserve management, with deposits recycling through banks and Treasury purchases returning to bank accounts, stablecoin growth can coexist with credit. A hypothetical $100 billion of new stablecoins with $40 billion held in bank deposits puts $60 billion in other eligible assets and gives banks a visible role.

If issuers rely on securities and a narrow set of banking partners, with $5 billion in deposits and $95 billion in other reserves, smaller banks lose access to low-cost funding. Recipient banks face concentrated payment and redemption flows.

The $35 billion gap between those two cases is an allocation difference, and the final effects run through securities markets, bank liquidity choices and lending. Issuer reserve reports, bank and custodian concentration, recipient banks' liquid assets and loans as a share of assets, compared with peers, will show which case unfolds.

Bessent invoked a law that sets the rules for who can issue American money. Meanwhile, the OCC's rule lets the new issuers decide where the reserves behind it sit, and the 2027 filings will show whether those choices keep bank lending funded.