OCC leaves room for stablecoin yield maneuvers in final rule

• Key insight: The Office of the Comptroller of the Currency retained the ban on issuers paying yield directly to stablecoin holders but removed a proposed presumption that would have treated certain third-party rewards arrangements as prohibited. 
• Forward look: The OCC said it will assess yield arrangements based on the "facts and circumstances" of each case, leaving the treatment of third-party rewards and transaction-based payments on the table.

The Office of the Comptroller of the Currency Wednesday finalized its GENIUS Act implementation rule for stablecoins that leaves the door open for third parties to offer yield-like rewards for stablecoin holdings or transactions.

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While in the final rule the agency retains a technical ban on direct yield payments from issuers to customers, the OCC says it will evaluate individual yield or rewards arrangements on an individual basis, removing a rebuttable presumption against stablecoin yield initially included in the proposed rule issued in March. That section of the proposed rule would have presumed stablecoin-linked rewards arrangements to violate the law, though that presumption would have been subject to challenges by regulated companies. 

Treasury Secretary Scott Bessent praised the final rule and the GENIUS Act that preceded it as a landmark achievement. 

"The GENIUS Act marks a watershed moment in American finance, further cementing the United States as the crypto capital of the world," Bessent said. "The OCC's final rule carries that landmark legislation forward, providing a clear, practical foundation for private-sector innovation, competition, and American leadership in digital assets."

The ability of stablecoin issuers to pay yield on stablecoin holdings has been a leading concern for the banking industry over the last two years, with banks concerned that stablecoin yield could draw customer deposits away from the regulated banking system. 

The GENIUS Act prohibits stablecoin issuers from paying interest or yield on payment stablecoins it issues, but bank industry advocates have argued the law's language permits a workaround in which third-party exchanges or affiliates offer "rewards" instead, similar to what many credit cards offer their customers. Since the passage of the law, banking industry groups have expressed concern that the law could divert $6.6 trillion of deposits away from traditional banks, citing an estimate from the U.S. Treasury Borrowing Advisory Committee.

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While the final rule removes the automatic presumption against yield arrangements, the OCC does acknowledge that certain arrangements would fall under the prohibition, while others may not. Payments made by an agency on an issuer's behalf, solely in connection with holding or using a stablecoin, would likely remain out of bounds. But the agency says other third-party arrangements might be permissible. 

"Depending on the facts and circumstances, a payment to payment stablecoin holders through an intermediary might be made solely in connection with the holding, use, or retention of a payment stablecoin or might be made, at least in part, for other reasons," the final rule notes. "the OCC will apply the language of the statute to the facts and circumstances of any particular arrangement so that any such arrangement can be evaluated based on all relevant facts and circumstances."

The agency also left open the door to transaction-based payments, saying such payments "that did not amount to interest or yield or that were not made solely in connection with the holding, use, or retention of a payment stablecoin would not be prohibited." 

Comptroller of the Currency Jonathan Gould said the final rule "advances President Trump and Secretary Bessent's vision for American leadership in digital assets" by "providing a clear, practical framework for payment stablecoin innovation, with strong standards for reserve backing, redemption, and risk management."

The Independent Community Bankers of America filed a lawsuit against the Office of the Comptroller of the Currency earlier this month challenging the agency's interpretation of the national trust charter that allowed nearly two dozen new special-purpose banks to be approved or conditionally approved during the second Trump administration. A 2024 Supreme Court ruling gives the plaintiffs' case considerably better odds of success.