WASHINGTON, D.C. / CryptoWire.AI / – Financial reform group Better Markets has warned that new U.S. rules are creating crypto-based banks that could threaten Americans’ savings and the wider economy. In an analysis published on October 27, the group said federal banking agencies are giving stablecoin issuers many of the benefits of banks. It argued they are doing so without the rules that keep traditional lenders safe.
The analysis was written by Phillip Basil, the group’s director of economic growth and financial stability. It followed the final stablecoin rule issued by the Office of the Comptroller of the Currency on October 21. The 721-page rule implements the GENIUS Act and takes effect on January 18, 2027. Better Markets described the rule as weak and said it brings crypto risks into the financial system.
The rule requires issuers to back stablecoins one to one with segregated reserves. It sets a liquidity floor of 5% of reserves, down from the 10% initially proposed, and a $5 million minimum capital floor. Issuers must also hold an operational backstop covering 12 months of expenses. Direct yield payments to holders are banned, while third-party reward programmes will be assessed case by case. The OCC also dropped a proposed automatic seven-day extension for large redemptions.
Group questions trust charters and Fed access
Better Markets said the OCC has expanded what national trust charters allow, so that crypto firms can take on activities beyond fiduciary services. The regulator has approved more than a dozen such charters for crypto companies, according to the group. It also said a federal charter lets firms rely on federal preemption rather than comply with the laws of all 50 states. The group argued the OCC has asserted that preemption without a clear legal basis.
The analysis also criticised a recent Federal Reserve proposal for a special account that would give firms, including trust-chartered crypto banks, direct access to Fed payment systems. Better Markets said crypto banks could still gain indirect access to Fed emergency lending by holding deposits at traditional banks. It added that the Federal Deposit Insurance Corporation has approved deposit insurance for a bank whose stated purpose is serving crypto companies.
Warning over bank lending and deposits
The group said crypto banks face lighter standards than traditional lenders. Banks must meet risk-based capital requirements of at least 4.5% plus a 2.5% buffer, and a leverage minimum of 4% for most banks. Larger banks must also hold enough liquid assets to cover 30 days of stressed outflows. Stablecoin issuers instead assess their own capital needs, subject to supervisory review. Their reserves must equal or exceed the tokens in issue, with no extra buffer, Better Markets said.
Better Markets cited a 2025 analysis by the Federal Reserve Bank of Kansas City. It estimated that stablecoin growth to $900 billion could cut bank lending by $325 billion. The group said lending could fall by $450 billion to $1 trillion if stablecoins reach $2 trillion. A White House study in April found that banning stablecoin yield would raise bank lending by only $2.1 billion. The banking industry has also opposed parts of the OCC rule.