BlackRock Pushes Back on Proposed Tokenized Reserve Cap

BlackRock has urged the U.S. Office of the Comptroller of the Currency (OCC) to reconsider proposed restrictions on tokenized reserve assets, arguing that a draft 20% cap could hinder the expansion of blockchain-based financial products tied to US Treasuries.

In a 17-page formal comment letter submitted on the final day of the regulator’s consultation period, the world’s largest asset manager challenged draft rules linked to implementation of the GENIUS Act, a framework designed to regulate payment stablecoin issuers and their reserve requirements.

At the centre of BlackRock’s concerns is a proposal that would limit tokenized reserve assets to 20% of a stablecoin issuer’s holdings.

BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), its tokenized Treasury product, manages almost $2.6 billion in assets according to RWA.xyz data. Should the ceiling be limited to 20%, it could affect how powerfully BUIDL could scale.

The fund has become increasingly integrated into crypto markets, providing reserve backing for several digital dollar products and serving as institutional collateral across trading platforms.

The firm argued that reserve assets should instead be evaluated on traditional risk factors, including liquidity, credit quality and maturity, rather than the technology used to represent or transfer them.

BlackRock also called on the OCC to clarify that exchange-traded funds (ETFs) investing solely in eligible reserve assets, including Treasury ETFs, should qualify as lawful reserves under the legislation.

With major institutions increasingly looking for greater flexibility to expand tokenized real-world asset offerings, it is unlikely to be the last example of tension with regulators over digital finance risk.