20% Cap Dispute: BlackRock Opposes GENIUS Rules, RWA Tokenization Enters Regulatory Reassessment Cycle

According to the draft rules published by the Office of the Comptroller of the Currency (OCC) in February 2026, if tokenized assets account for more than 20% of a reserve asset portfolio, the corresponding stablecoin issuer will be unable to meet compliance requirements. This means that regardless of the quality of the underlying assets, the format itself determines the compliance boundary.

This is not merely a technical adjustment. The global tokenized RWA market had already surpassed $19.3 billion by the end of the first quarter of 2026, with tokenized U.S. Treasuries rising to $15.2 billion in early May. Among them, BlackRock’s BUIDL fund manages approximately $2.58 billion in assets and has become one of the leading reserve sources for many stablecoin projects. Once the 20% figure is incorporated into the final rules, it will not only fracture the current growth logic of RWAs but also directly reshape the cost function for institutions deploying on-chain assets.

On May 2, 2026, BlackRock submitted a 17-page formal comment letter the day after the OCC rule consultation period closed, explicitly requesting regulators to abandon this proposed cap.

A Letter and Its Clear Intent

On February 25, 2026, the OCC issued a draft implementing rule for the GENIUS Act (officially published in the Federal Register on March 2), which proposed the possibility of setting limits on the proportion of tokenized reserve assets, while openly soliciting industry feedback until May 1, 2026.

BlackRock submitted a formal comment on May 2, 2026. The document clearly opposes setting an upper limit on tokenized reserve assets, arguing that such restrictions are unrelated to OCC’s regulatory objectives. Additionally, the document put forward three specific requests: expand the scope of qualified reserve assets; clarify whether U.S. Treasury ETFs can be included in reserves; and add two-year floating rate U.S. Treasuries to the list of qualified assets.

From the text itself, BlackRock does not directly advocate for “abolishing all regulation,” but suggests replacing a uniform ratio limit with asset quality indicators—meaning risk levels should be assessed based on credit quality, duration, and liquidity, rather than whether assets are held or transferred via distributed ledger technology.

The Cap Has Been a Burden for Some Time, but Today It Becomes a Key Variable

The following key points are arranged chronologically.

2019–2023: The Emergence of Tokenized U.S. Treasuries

In 2021, Franklin Templeton launched the BENJI fund on Stellar, becoming the world’s first U.S.-registered money market fund recorded entirely on a public blockchain. At that time, tokenized Treasuries were still on the fringe of mainstream narratives, with few institutional followers.

March 2024: BlackRock Officially Enters the Field

BlackRock launched the BUIDL fund via Securitize, with a portfolio comprising short-term U.S. Treasuries, overnight repurchase agreements, and cash equivalents, setting a minimum subscription threshold of $5 million, limited to qualified investors.

In less than two years, BUIDL grew from zero to approximately $2.58 billion in assets under management, becoming the largest institutional-grade tokenized U.S. Treasury product on-chain.

2025–Early 2026: Deep Integration in the Industry Chain

BUIDL’s functionality far exceeds that of a closed-end fund product. In practice, the fund has become the reserve backing for over 90% of the USDtb stablecoin issued by Ethena and JupUSD by Jupiter. This “fund→stablecoin reserve→DeFi application” chain has transformed BUIDL from a simple asset management tool into a core collateral module of the on-chain financial system.

July 18, 2025: GENIUS Act Signed into Law

After passing the Senate (June 17) and the House (July 17), the GENIUS Act was signed into law by the President on July 18, 2025, establishing a comprehensive legal framework for stablecoin issuance at the federal level.

February 25 – March 2, 2026: OCC Draft Rules Issued

On February 25, 2026, the OCC issued a notice of proposed rulemaking for the implementation of the GENIUS Act, which was officially published in the Federal Register on March 2. The draft included a proposed limit of approximately 20% on tokenized reserve assets.

March 5, 2026: Three Major Regulators Issue Technology-Neutral Guidance

The OCC, Federal Reserve, and FDIC jointly released FAQs, establishing the principle of technological neutrality—that tokenized securities should receive the same treatment under capital rules as traditional securities, regardless of whether the underlying blockchain is permissioned or public.

The draft rules and the technology-neutral guidance were released within about ten days of each other, but their policy logic diverged: the former emphasized technological neutrality, while the latter implied additional restrictions on specific technologies.

May 2, 2026: BlackRock Submits Feedback

BlackRock submitted a 17-page formal comment the day after the consultation deadline, clearly opposing the restriction ratio cap and advocating for a prudential standard based on asset quality.

Reviewing this timeline reveals two key structural points: first, before the GENIUS Act was signed into law, the proportion of tokenized reserve assets was never restricted at the federal legal level; once the proposed rules are finalized, the emerging RWA market at scale will face a structural ceiling. Second, BlackRock’s decision to submit a comprehensive comment after the consultation period indicates a thorough internal assessment, not just a routine letter.

The Impact Path of the Cap on the Entire RWA Industry Chain

Before judging whether a rule constitutes a systemic industry variable, it’s necessary to understand the current position of tokenized U.S. Treasuries within the on-chain system.

According to rwa.xyz data, by early May 2026, the total tokenized U.S. Treasury market size reached about $15.2 billion, an increase of $1.06 billion over the past 30 days, with an average annualized yield of 3.36%. There are 58,658 unique addresses holding 71 different tokenized Treasury products. CoinGecko reports that as of Q1 2026, tokenized U.S. Treasuries accounted for approximately 67.2% of the total tokenized RWA (which was $19.3 billion).

More critically, tokenized Treasuries are not just static assets stored on-chain. In 2025, the transfer volume of tokenized U.S. Treasuries on the XRP Ledger was about $70M; in the first four months of 2026, this figure rose to approximately $352M, about five times the total for the previous year. Asset on-chain is no longer just issuance but evolving into a new on-chain circulation layer driven by blockchain.

Against this background, the impact path of the 20% cap can be broken down into three levels.

Level 1: Direct squeeze on current products with high tokenization ratios

According to recent analysis by Tiger Research, the largest holder of BUIDL is not a traditional financial institution but DeFi protocols with clear yield and compliance requirements—Sky/Grove systems hold about $984 million in BUIDL, and Ethena’s USDtb holds about $800 million. These protocols’ reserves are highly concentrated in tokenized Treasuries, so a 20% limit will directly constrain the expansion of such contracts.

Level 2: Limiting deep integration of tokenized assets into reserve systems

For example, BlackRock’s comment explicitly suggests allowing U.S. Treasury ETFs and two-year floating-rate Treasuries to be included in reserves. If OCC maintains the 20% cap, even if ETFs are whitelisted, their practical substitution space will still be artificially compressed.

Level 3: Suppressing institutional infrastructure investment willingness

Banks, trading platforms, and custodians, when deciding to invest in digital asset infrastructure, need to evaluate a core parameter: total market availability. The 20% cap will significantly reduce the expected upper limit of total market availability, potentially directly reducing institutional capital budgets for infrastructure, with effects beyond the digital realm on the real economy.

Public Opinion and Fact Summary: Multiple Stakeholder Positions

Core rationale for pushing to remove the cap

BlackRock’s language in the comment letter is highly traceable. Its core argument is not “abolishing regulation,” but that risk should be assessed based on asset nature—variables affecting the safety of tokenized reserves are credit risk, duration exposure, and liquidity depth, not whether the assets are recorded on a distributed ledger.

The OCC’s own joint document on March 5, 2026, establishing the principle of technological neutrality conflicts internally with the 20% cap: the joint statement explicitly states no differential treatment based on blockchain network type, but the February 25 draft sets a clear ratio limit based on asset registration format.

Additionally, global banking institutions are advancing tokenized reserve asset applications. In April 2026, the Hong Kong Monetary Authority issued the first stablecoin licenses to HSBC and Anchorpoint (a joint venture of Standard Chartered, HKT, and Animoca Brands). Major Japanese banks—Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui—have also launched proof-of-concept projects for Japanese government bond tokenization, using the Progmat platform on Canton Network to manage JGBs as collateral, aiming for 24-hour trading and same-day settlement.

Minority cautious views supporting prudence ratios

Some cautious perspectives favor establishing a non-zero but gradual transition period for the relationship between the national banking system and on-chain token markets. These views do not oppose tokenized reserves’ inclusion but suggest that the system should undergo resilience testing before relaxing restrictions. The core concern is the lack of stress test data for on-chain assets under extreme market conditions.

It’s important to clarify that these cautious views do not equate to support for the specific 20% ratio. No industry participant has publicly supported this particular figure in writing.

Fact, Misunderstanding, and Extended Interpretation

In discussions surrounding this event, several key points need clarification.

Fact 1: The 20% cap remains at the proposal stage

As of May 12, 2026, this cap is part of the draft rule and must go through formal rulemaking procedures before it can take effect. Multiple industry participants, including BlackRock, have submitted feedback. The rule could be modified, withdrawn, or redrafted.

Fact 2: The GENIUS Act has been signed into law but with an implementation window

The GENIUS Act was signed into law on July 18, 2025, but its implementing rules must be developed by federal banking regulators within one year, with full implementation by January 18, 2027. This means the current period is a critical window for rulemaking.

Misunderstanding: The cap equals a complete ban on tokenized reserves

The current draft does not prohibit tokenized reserve assets but sets a maximum proportion within a portfolio. For large banks, 20% may still be many times their current scale, but for core protocols and highly reserve-dependent DeFi products, this ratio could become a growth bottleneck as the market expands.

Extended interpretation: The cap is more a policy signal than a purely technical parameter

The 20% limit is interpreted as a regulatory “reservation” on systemic exposure to on-chain assets. Even if current usage is well below this level, setting a fixed ratio cap could imply that, regardless of market maturity, the ratio remains unchanged—this is the logic behind BlackRock’s opposition to a “hard cap” in their comment letter.

In reality, the cap has not been canceled or confirmed; it remains in the rulemaking window. Its final form will depend on OCC’s revised draft after considering industry feedback.

Industry Impact Analysis: How the Cap’s Dispute Propagates to the Next RWA Phase

From an institutional perspective, the certainty or ambiguity of regulatory texts creates real costs. The following are three potential impact directions based on current facts.

Issuance pace and structural design of tokenized regulated products

BlackRock, simultaneously with submitting feedback, applied to the SEC on May 8, 2026, to establish two new products: one is a digital share class for the approximately $6.1 billion BSTBL fund (deployed on Ethereum), and the other is a new institutional tokenized fund, BRSRV, with a minimum subscription of $3 million, to be deployed across multiple blockchains, targeting ultra-short-term U.S. government securities and repos. If regulations embed unnecessary ratio caps, these product expansions could be constrained.

BlackRock CEO Larry Fink has repeatedly expressed the long-term vision that “all financial assets will eventually be tokenized.” From a product delivery perspective, this is not only a macro vision but also the basis for registration and infrastructure development.

Reconstruction of bank balance sheets

The three major regulatory agencies’ March 5, 2026, technical-neutral guidance has eliminated uncertainty about capital ratios for banks holding tokenized securities. However, if the GENIUS Act draft retains the tokenized reserve ratio limit, even banks wishing to actively include tokenized Treasuries in their balance sheets will be artificially restricted. This could directly dampen institutions’ motivation to shift from observers to participants.

Scaling of custody, auditing, and on-chain transparency services

The growth of tokenized Treasuries has created new service demands—such as independent verification via data oracles, wallet compliance checks, identity mapping solutions, and asset proof services meeting institutional audit standards. On March 26, 2026, Securitize announced it had integrated Chronicle Protocol to provide on-chain asset verification for BUIDL, with Chronicle Proof of Asset offering independent position-level validation data, continuously demonstrating the usability, timeliness, and integrity of fund assets.

The development speed of these industries largely depends on clients’ (banks, funds, stablecoin issuers) long-term market size expectations. The existence of a cap could weaken the incentive for service providers to invest in R&D and system building over the long tail.

Conclusion

The debate over whether to remove or retain the ratio essentially touches a fundamental question: when technological progress allows the risk profile of Treasuries to be assessed independently of their registration format, is there still a reason for rules to set boundaries based on format?

This also reflects the underlying narrative of the institutional RWA track: it’s not about any particular token, fund, or rule, but whether the traditional financial system is willing to recognize that the vehicle carrying the risk value of Treasuries can be a smart contract or a paper certificate—what matters is the asset itself.