Stablecoin Bill Adds to OCC’s Workload as Trump Team Cuts Jobs

A key federal banking regulator is set to receive a wave of charter applications under stablecoin legislation heading to President Donald Trump, potentially stretching the agency’s capabilities even as its workforce shrinks.

The House on Thursday cleared the “GENIUS Act” (S. 1582), which will allow the Office of the Comptroller of the Currency to issue national charters to nonbank payment stablecoin operators.

Even before the landmark crypto legislation, nontraditional companies including stablecoin operators Ripple Labs Inc. and Circle Internet Group Inc. had applied in recent weeks for national trust bank charters with the OCC.

The regulator will now be responsible for directly supervising all the newly chartered entities, on top of its longstanding mandate to examine national banks such as the depository units of JPMorgan Chase & Co. and Bank of America Corp.

The heavy workload, which also includes an anticipated uptick in proposed bank mergers, comes as the OCC is set to lose roughly 25% of its 3,600 employees through the Trump administration’s voluntary buyout offers, and potentially more if it pushes ahead with a formal reduction-in-force effort.

It all adds up to an acute challenge for newly confirmed OCC chief Jonathan Gould as he seeks to streamline the charter application process, said Patrick Hanchey, an Alston & Bird LLP partner who handles bank licensing and merger transactions.

“Just the sheer number and novelty of applications coming in, that could lead to some delays,” he said.

The OCC doesn’t comment on personnel issues, a spokesperson said, directing inquiries to the agency’s licensing manual that details how it reviews charter applications.

The agency supervised just over 1,000 financial institutions as of last year, according to OCC data.

Faster Reviews

A national charter is attractive for banks—and, soon, payment stablecoin operators—because it allows them to avoid complying with most state laws under the OCC’s preemption powers.

Getting a coveted license can be a drawn-out affair, although the OCC under the Trump administration is taking steps to speed up the process.

“Whereas review periods extended well past the one-year mark during prior administrations, we should expect well-crafted applications that provide a sufficient basis for a thorough agency vetting to be processed within approximately 120 days,” said Michele Alt, a partner at consulting firm Klaros Group who has been counseling companies seeking charters with the OCC.

But with more speed comes a greater risk that the OCC will approve some charter applicants that are unqualified, putting their customers and the wider banking system at risk, said Todd Baker, a senior fellow at Columbia University’s Richard Paul Richman Center for Business, Law, and Public Policy.

“There’s a significant risk that the type of analysis that needs to be done isn’t being done,” he said.

Meanwhile, the OCC, along with the Federal Deposit Insurance Corp. and the Federal Reserve, have withdrawn Biden-era crypto directives and issued new guidance laying out how banks can handle stablecoins and other novel financial tools without running afoul of federal rules.

Banking regulators may find themselves walking a fine line, moving to ease the pathway for crypto products while mitigating any broader threats to the banking system.

“There’s still a recognition by the OCC, and the other regulators for that matter, that these activities carry with them a certain level of heightened risk,” said Shayna Olesiuk, the director of banking policy at advocacy group Better Markets.

Experience Question

Staff cuts at the OCC are likely to focus on legal, analysis, and back-office teams, not the licensing and supervision units key to maintaining safety and soundness, according to an agency email previously obtained by Bloomberg Law.

But even among units largely spared from job cuts, at least some OCC veterans may take advantage of the agency’s buyout offers, raising questions about the regulator’s capacity to handle an influx of charter applicants.

Around 1,000 OCC staff members departed or at least applied for a voluntary buyout following several rounds of offers in recent months, people familiar with the matter previously told Bloomberg Law. The agency had the flexibility to reject applications from people working in mission-critical areas.

It’s believed that experienced OCC workers were more likely than their younger colleagues to apply for buyouts, which poses its own risk, Olesiuk said.

“The fact is they just do not have the experience that some of the people who left have,” she said.

To compensate for the smaller workforce, the OCC will likely have to be creative in allocating resources, Alt said. That includes having the agency’s Office of Financial Technology and “novel activities” experts back up both the licensing and examination teams.

The OCC under Gould is also likely to apply extra scrutiny to stablecoin and other novel license applicants and focus supervisory resources on them, to ensure a newly licensed firm doesn’t blow up, Alt said.

“He will be very careful in connection with licensing,” she said. “It’s not just going to be a rubber stamp by any means.”

Rubber Stamp

But the “rubber stamp” issue looms large over new charter applications.

The cryptocurrency industry is expecting results beyond even the “GENIUS Act” after throwing money behind the president’s 2024 election campaign. Trump for his part has profited from forays into the cryptocurrency industry, and his sons Donald Jr. and Eric are backing their own stablecoin operation.

The OCC, following pressure from GOP lawmakers and industry groups, announced earlier this year it would no longer monitor banks for risks stemming from crypto and other clients viewed as controversial in previous administrations.

Even if the OCC is careful in how it reviews applications from stablecoin companies and supervises them once a charter is granted, the agency will have a hard time shaking skepticism around those reviews.

“From a political standpoint, it’s very clear that every crypto company that wants a trust charter is going to get one,” Baker said.