OCC's final rule to start fresh in weighing stablecoin rewards against GENIUS Act ban

Wednesday's extensive rule establishes the start-to-finish process for regulated firms and foreign companies to issue stablecoins in the U.S. and for how firms will keep custody of them. But the rule is also meant to operate alongside a number of similar rules still being worked on by other agencies, and this effort leaves aside the Bank Secrecy Act components that will be handled by other arms of the Treasury.

"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,” said Secretary of the Treasury Scott Bessent in a statement.

But the questions of yield have long swirled at the center of stablecoin regulation.

Yield saga

A number of financial firms, such as U.S. exchange Coinbase, have well-established rewards programs — akin to the customer incentives associated with credit card providers. Some of the highest rates are currently offered by PayPal and Kraken.

The GENIUS Act's ban on the issuers giving anything that looks like interest directly to the holders of their tokens has been a controversial topic and drew a lot of comments to the agency after its earlier proposal.

The programs have been declared by bankers to be a dangerous competitive threat to the customer deposits at the core of their business model. The banks felt so strongly about this that they lobbied to force further changes of the GENIUS Act into the later Digital Asset Market Clarity Act, and they continued fighting the point so vigorously that the Clarity Act couldn't muster unanimous Republican support when it failed to advance in a key Senate vote last month.