Reserve Custody Architecture

Notes

For payment stablecoins, the GENIUS Act prescribes the composition of permissible reserves — U.S. currency, insured depository deposits, short-dated Treasuries, overnight repos, government money market fund shares, and tokenized forms of the foregoing¹ — and the OCC's implementing rulemaking prescribes how those reserves must be held by OCC-supervised custodians.² Together, the statute and the rule answer two of the three questions a Reserve Custody Architecture must resolve: what assets count, and how they must be held by a supervised custodian.

The third question — whether the architecture, as composed, satisfies the redemption duty — is not answered at the asset or custodian layer. It is answered at the architectural layer: by the chain of custody between issuer, custodian, sub-custodian, and any tokenization platform; by the legal segregation that protects the reserve from the issuer's bankruptcy estate;³ by the reconciliation procedures that bind on-chain supply to off-chain reserves; and by the operational latency between a redemption request and the release of the underlying asset. A Reserve Custody Architecture either resolves these questions or it does not. Compliance with the asset and custodian rules is necessary but not sufficient.