GENIUS Act: Circle Seeks Clear Divide Between Payment Stablecoins and Tokenized Deposits

USDC issuer Circle has submitted a comment letter on the Office of the Comptroller of the Currency’s (OCC) proposed rulemaking to implement the GENIUS Act. The stablecoin issuer also highlighted other core principles, such as a level playing field for all issuers, in its response to the OCC’s framework for the crypto bill.

Circle Submits Comment Letter On OCC’s Proposed GENIUS Act Framework

In a blog post, Circle revealed that it had submitted comments to the OCC on its proposed rule implementing the GENIUS Act. The firm went further to highlight a number of technical areas of feedback in its comment letter, which it noted focus on core principles such as a clear distinction between payment stablecoins and tokenized deposits.

The USDC issuer said that there should be no confusion between payment stablecoins and tokenized deposits. Circle said that they serve different purposes, which is why the OCC shouldn’t treat them as interchangeable payments and settlement assets.

Circle further noted that Congress has explicitly excluded tokenized deposits from the GENIUS Act because payment stablecoins are built for broad transferability and settlement. On the other hand, these tokenized deposits are digital representations of bank liabilities. “Tokenized deposits raise different questions that require their own regulatory framework,” the stablecoin issuer added.

It is worth noting that several banks have already issued these tokenized assets. This includes JPMorgan, which issued the JPM Coin on the Base network as a tokenized deposit. HSBC also recently completed its tokenized deposit pilot on the Canton network, which JPMorgan is looking to expand JPM Coin to.

An Even Playing Field And Strong Market

Circle also stated that all stablecoin issuers should compete on a level playing field as part of its feedback in the comment letter on the OCC’s proposed framework for the GENIUS Act. The firm further remarked that all issuers should operate within a common prudential perimeter, whether it is a bank or nonbank, state or federal, and domestic or foreign issuer.

The USDC issuer explained that this matters because regulatory arbitrage can weaken trust and put compliant issuers at a disadvantage. Additionally, Circle stated that tokens should not be able to market themselves as “stable” without meeting robust standards.

The firm noted that this matters because consumers and businesses should not have to read the fine print to determine whether a dollar-backed instrument is actually subject to the GENIUS Act. Ahead of the implementation of this crypto bill, stablecoin issuers and other crypto firms have received a major boost with the progress of the CLARITY Act.

The banking and crypto industries have reached a compromise on the stablecoin text in the CLARITY Act, which preserves stablecoin rewards but excludes rewards for passive holdings. Circle’s stock rallied as much as 20% yesterday amid hopes that crypto firms could soon gain more regulatory clarity.