BlackRock, the world’s largest asset manager, submitted a formal comment letter to the Office of the Comptroller of the Currency (OCC) on May 3, 2026, expressing strong opposition to a proposed rule that would impose a 20% cap on tokenized reserve assets held by national banks and federal savings associations. The firm argued that the proposed limitation is fundamentally flawed because it prioritizes the technological medium of an asset over its underlying economic substance and credit quality.
The dispute centers on the OCC’s recent regulatory framework, which seeks to mitigate perceived operational and liquidity risks associated with distributed ledger technology (DLT). Under the proposal, regulated entities would be prohibited from holding more than 20% of their total reserve assets in tokenized formats, regardless of whether those tokens represent high-quality liquid assets like U.S. Treasury bills. BlackRock’s letter, submitted by its regulatory affairs division, contends that such a cap would create an artificial barrier to the modernization of financial markets and unfairly penalize funds utilizing blockchain for settlement and transparency.
A primary focus of BlackRock’s objection is the impact on its BlackRock USD Institutional Digital Liquidity Fund, commonly known as BUIDL. Since its inception, the BUIDL fund has served as a cornerstone of BlackRock’s digital asset strategy, providing institutional investors with yield through U.S. Treasury-backed tokens. BlackRock noted that the fund has demonstrated significant operational resilience and that the use of DLT actually enhances transparency by providing real-time visibility into fund holdings and transactions. The firm stated that the 20% cap would effectively restrict the growth of BUIDL and similar vehicles, forcing institutions to maintain less efficient, legacy record-keeping systems.
In the filing, BlackRock emphasized that risk management should be technology-neutral. The firm argued that a U.S. Treasury bond remains a low-risk asset whether it is recorded on a traditional centralized ledger or a decentralized blockchain. BlackRock’s Head of Digital Assets, Robert Mitchnick, has previously emphasized the firm’s goal to bring traditional financial assets into the digital age to reduce settlement times and costs. The letter to the OCC reinforces this position, suggesting that the regulator should instead focus on establishing robust standards for smart contract audits and cybersecurity rather than imposing arbitrary volume limits.
The OCC’s proposal comes amid broader legislative discussions regarding the GENIUS Act, which seeks to define the regulatory boundaries for digital assets in the United States. While the OCC has cited concerns over the instantaneous nature of tokenized redemptions potentially leading to liquidity mismatches during periods of market stress, BlackRock countered that the programmable nature of tokenized assets allows for more sophisticated liquidity management tools than are currently available in traditional finance. The OCC is expected to review the public comments before issuing a final ruling later this year.