BlackRock has formally urged the Office of the Comptroller of the Currency (OCC) to remove a proposed 20% cap on tokenized reserve assets and expand the range of eligible assets under draft rules tied to the GENIUS Act.
The request was made in a detailed comment letter submitted during the regulator’s public consultation period, highlighting growing tension between traditional financial oversight and emerging blockchain-based asset models.
Key Highlights
- BlackRock opposes a 20% cap on tokenized reserve assets
- Calls for expanded eligibility of reserve assets, including ETFs
- Warns cap could restrict growth of tokenized Treasury products
- Argues risk should be based on credit quality, liquidity, and maturity—not technology
BlackRock Challenges Proposed Reserve Cap
In its submission, BlackRock argued that the OCC’s proposed 20% limit on tokenized reserves is arbitrary and restrictive, particularly for rapidly growing tokenized asset markets.
The firm emphasized that risk should not be determined by whether an asset is issued on blockchain infrastructure:
- Risk depends on credit quality
- Influenced by duration and liquidity
- Not inherently tied to tokenization or distributed ledger use
A cap, the firm warned, could hinder innovation and limit the scalability of tokenized financial products.
Impact on BlackRock’s Tokenization Strategy
The proposed rule has direct implications for BlackRock’s BUIDL fund, a tokenized U.S. Treasury product managing approximately $2.6 billion in assets.
The fund plays a key role in backing stablecoins such as USDtb and JupUSD, supplying a significant portion of their reserve assets.
BlackRock warned that enforcing a strict cap could:
- Constrain the growth of tokenized Treasury markets
- Reduce efficiency in stablecoin reserve management
- Limit institutional participation in blockchain-based finance
Push for Broader Eligible Assets
Beyond removing the cap, BlackRock also called for clarity and expansion of eligible reserve assets under the GENIUS Act framework.
Specifically, the firm requested:
- Recognition of Treasury-based ETFs as valid reserve assets
- Equal regulatory treatment for tokenized and traditional instruments
- Safe-harbor protections similar to money market funds
These changes, BlackRock argues, would support a more flexible and innovation-friendly regulatory environment.
Background: GENIUS Act Framework
The GENIUS Act establishes a comprehensive regulatory structure for payment stablecoin issuers in the United States, including rules around:
- Reserve asset composition
- Redemption requirements
- Risk management and custody
The OCC’s draft rules aim to ensure that stablecoins remain fully backed by high-quality, liquid assets while maintaining financial stability.
Industry-Wide Implications
BlackRock’s intervention reflects broader industry concerns about how regulators approach tokenized assets.
If the 20% cap is implemented:
- Tokenized asset adoption could slow
- Institutional innovation may face constraints
- Stablecoin reserve structures could become more rigid
Conversely, removing or adjusting the cap could accelerate the integration of blockchain-based financial instruments into mainstream markets.
Conclusion
BlackRock’s push to eliminate the OCC’s proposed 20% cap and expand eligible reserve assets underscores a pivotal moment in financial regulation.
As policymakers finalize rules under the GENIUS Act, the outcome will likely shape the future of tokenized finance, stablecoin infrastructure, and institutional adoption of blockchain-based assets in the United States.
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