Summary
The GENIUS Act rulemaking is progressing with five proposed rules published. The latest CIP NPRM (June 18) would require PPSIs to implement bank-like customer identification programs for primary market transactions only. The OCC's conforming NPRM (June 22) includes a "significant or systemic" enforcement threshold. Comments due August 21 and July 24 respectively.
Key Points
- Five proposed rules published: OCC (March), FDIC (April), NCUA (April), Treasury (April), FinCEN/OFAC (April)
- CIP NPRM (June 18): customer identification program for PPSIs
- OCC Conforming NPRM (June 22): technical changes to align March proposal with April OFAC/FinCEN rules
- CIP scope: primary market only (issuance, redemption, conversion with PPSI)
- CIP excluded: secondary market (peer-to-peer transfers, smart contract interactions)
- CIP requirements: mirror bank rules (name, DOB, address, ID number)
- Verification: documentary or non-documentary; before or after account opening
- Reliance: PPSI can rely on other financial institutions for CIP (written contract required)
- Compliance date: 12 months after effective date of final rule
- OCC enforcement: only for "significant or systemic" program failures
- OCC requests comment on: reserve asset protection, fees, direct redemption for non-customers
- Key structural decision: "account" and "customer" defined to exclude secondary market
- Practical impact: manageable for institutional issuers; significant compliance build for smaller firms
- What to watch: whether final rules include ACH access for skinny accounts; comment period outcomes