OCC Proposes Stablecoin Redemption Rules with Up to 7-Day Extension for Large Requests

The U.S. Office of the Comptroller of the Currency (OCC) has proposed rules requiring stablecoin issuers to process redemptions within two business days, extending up to seven days for large-scale requests. The proposal distinguishes between direct issuer redemptions and secondary market sales on exchanges. The OCC released the draft regulations on March 2 as part of implementing the GENIUS Act, with public comments closing May 1. The rules define 'timely redemption' as payment within two business days of receiving a request. However, if redemption requests exceed 10% of outstanding supply within 24 hours, remaining requests automatically extend to seven days. This extension applies only to direct redemptions between issuers and holders, not secondary market transactions on exchanges or conversion services. The proposal also requires issuers to notify the OCC within 24 hours if redemption demand exceeds 10% of outstanding supply. The OCC noted that rapid liquidation of reserve assets during large redemptions could cause price volatility. The Federal Reserve staff analysis from September 4 mentioned that while stablecoins can transfer instantly on blockchain, dollar redemption processing speed remains a separate issue.