The Office of the Comptroller of the Currency (OCC) is working to draw small US lenders into the stablecoin sector, publicly calling on them in a Monday statement to consider becoming payment stablecoin issuers before the new licensing framework takes effect. The outreach arrives at a pivotal moment for community banks as they weigh whether to compete directly with crypto companies in the payments arena.

The OCC's pitch to small lenders

In its Monday statement on X, the OCC said it "encourages the development of payment stablecoin capability in the community banking industry." The regulator also advised small banks that an institution, or one of its subsidiaries, may "consider applying for becoming, or a subsidiary for becoming, a permitted payment stablecoin issuer."

The appeal is tied to the regulator's final rulemaking under the Guiding and Establishing National Innovation for US Stablecoins Act. The GENIUS Act was signed into law on July 18, 2025, creating a federal licensing system for payment stablecoins. As previously reported, the OCC published its implementing rules on October 21, which define standards for reserves, redemption, custody, and risk management.

The licensing scheme will take effect on January 18, 2027. From that date onward, any entity will be required to obtain prior approval from the OCC before issuing a payment stablecoin, and failure to do so can lead to criminal consequences.

Why the OCC wants banks in the game

Jonathan V. Gould, the Comptroller of the Currency, framed the rulemaking process as a return to the agency's roots. "In implementing the GENIUS Act and supervising stablecoin issuers, we are reminded of where we come from and the responsibility we have for facilitating financial innovation," Gould said in his Monday post on X, as PYMNTS reports. He added that "this final rule establishes a federal framework that allows stablecoins to fulfill their potential while advancing the dollar's dominance."

The agency also pointed to its Community Bank Comeback Initiatives, which it says are designed to balance regulation for smaller institutions so they can continue meeting their customers' needs. To ease small banks' concerns, the regulator released a fact sheet highlighting two key points: community bank deposits can qualify as eligible reserve assets for stablecoins, and supervision will be scaled appropriately to the risk profile of each individual issuer.

If enough small lenders join the process, they could meaningfully reduce the stablecoin market share currently held by crypto companies and large financial institutions.

The $850 billion lending worry

Not every bank is convinced, however. The Independent Community Bankers of America has opposed the trend toward stablecoins, estimating that their adoption could limit community banks' lending capacity by almost $850 billion. The logic behind that stance is that deposits, which currently serve as a source of funding for local loans, would instead flow into stablecoins.

The OCC's implicit response to such objections is that banks can issue stablecoins themselves and use deposits as reserves. More than a regulatory question is at stake here, though. Last month, the ICBA sued the OCC, arguing that crypto companies that received charter approvals hold an advantage because they are not subject to the same regulatory requirements as community banks.

The clock is now ticking for everyone, however. Existing issuers that have a substantially complete application submitted by the compliance deadline can obtain a temporary waiver for up to 12 months, effectively extending the runway to approval by one year rather than forcing an immediate stop. To secure such a waiver, banks must submit their applications before January 18, 2027. Between now and that date, the concrete markers are whether community banks convert the OCC's encouragement into actual applications, how many existing issuers file substantially complete paperwork in time for the 12-month waiver, and how the ICBA's lawsuit over charter-approval advantages for crypto companies unfolds alongside the compliance countdown.