The United States is accelerating the development of a historic regulatory framework for the cryptocurrency industry. To ensure that future stablecoin regulations are aligned with actual market operations, stablecoin issuer Circle has formally submitted in-depth industry advice to regulatory agencies.
According to an official announcement, Circle formally submitted a comment letter to the Office of the Comptroller of the Currency (OCC) on May 1st, expressing the industry's position regarding the proposed rules for implementing the GENIUS Act. This landmark act marks the first time the United States has established a dedicated digital payment regulatory framework for "payment stablecoins."
OCC Proposed Framework: Establishing Institutional-Level Digital Finance Standards
In its announcement, Circle stated that the regulatory framework proposed by the OCC covers standards ranging from reserve management to information security, setting a significant milestone for the development of the payments industry. The framework requires stablecoin issuers to operate as "separate, independent entities" with the ability to operate seamlessly 24/7/365, intensive risk management, and substantial operational resources to meet the enormous demand from the global market.
To ensure the bill's effectiveness in practice, Circle provided several technical feedbacks, grounding its suggestions in the following seven core principles :
- U.S. standards should lead the world: Strong U.S. regulations should set a global benchmark for a trusted "digital dollar," promoting the advantages of the rule of law and secure digital currency globally.
- Stablecoins must operate as a "single instrument": their value lies in their cross-platform, cross-market liquidity and fungibility. Market fragmentation increases the risk to the global payment system and reduces the liquidity of digital currencies.
- Consumer protection is paramount: issuers must be able to provide reliable redemption services regardless of the holder's location. The trust in stablecoins is built on a simple promise: users can get their money back at any time.
- Without high standards, one cannot claim to be "stable": tokens should not call themselves "stablecoins" if they fail to meet the required standards, and consumers should not be forced to read cumbersome supplementary rules to confirm whether an asset is substantially regulated.
- All issuers should compete in a level playing field: whether they are banks or non-banks, state or federal, domestic or foreign entities, all issuers should operate within a common prudential regulatory framework to prevent regulatory arbitrage from undermining market confidence.
- Risk management must be aligned with the role of stablecoins: stablecoins are not only technology products, but also payment and settlement tools, requiring a robust protection framework for credit, liquidity, operations, and anti-money laundering (AML).
Clarifying the boundaries: Stablecoins ≠ Tokenized deposits
Of all the suggestions, Circle devoted particular space to clarifying a concept that is often confused in the current financial world: payment stablecoins should not be confused with tokenized deposits.
Circle emphasizes that these two serve distinct purposes and should not be considered interchangeable payment and settlement assets. Payment stablecoins are designed to achieve "widespread transfer and settlement," while tokenized deposits are essentially "digital representations of bank liabilities."
This is why the US Congress explicitly excluded tokenized deposits when pushing for the GENIUS Act, as the latter would raise various regulatory issues requiring a dedicated regulatory framework. Circle concludes that this bill is a historic turning point for dollar-backed digital currencies. Through clear, pragmatic, and consistently applied rules, the US will be able to successfully build future markets and solidify the digital dollar's leading position in the global economy.
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