GENIUS Act: OCC Gives Stablecoin Rewards No Free Pass
The OCC has dropped its plan to presume some stablecoin reward deals unlawful, but its final GENIUS Act rule gives older programs no automatic pass either.
Key Takeaways
- Case-by-case review replaces the February yield test.
- Platform rewards can face scrutiny through issuer payments.
- Rule takes effect January 18, 2027.
- Existing issuers can request temporary operating waivers.
The Office of the Comptroller of the Currency published the rule on October 21, becoming the first federal banking regulator to finalize its GENIUS Act regulations. It covers stablecoin subsidiaries of national banks and federal savings associations, nonbank federal qualified issuers, some state issuers under its enforcement reach, and foreign issuers registered with it.
What the OCC dropped, and why
The February proposal targeted one specific route for yield. If an issuer paid an affiliate or a “related third party,” and that party paid stablecoin holders, the arrangement would have been presumed to break the ban on issuer-paid yield. Related third parties included firms paying yield on the issuer’s behalf and white-label partners selling a coin under their own brand. The issuer could rebut the presumption, but the burden sat with it.
The final rule removes that test. The OCC’s reasoning is that it could err in both directions, catching legitimate deals while making anything outside its wording look acceptable. An OCC official also told reporters that the February language estimated how likely evasion was, rather than reflecting how young the market still is.
Instead, examiners will assess individual arrangements during application reviews and ongoing supervision. The agency says it will act against violations and evasion and issue further public guidance where needed. It gave no examples of structures that would fail.
What “solely” leaves room for
The GENIUS Act bars an issuer from paying interest or yield “solely in connection with the holding, use, or retention of such payment stablecoin.” The final rule keeps that wording. The OCC also signaled that a payment made at least partly for other reasons would fall outside the ban.
That makes funding the central question. An exchange paying holders from its own budget is not making an issuer payment, although anti-evasion rules still apply if the money traces back to the issuer. A platform that receives part of an issuer’s reserve income and passes it on to holders is the arrangement the February presumption was built to catch.
Several large platforms advertise rewards near 4%. At the time of writing, Coinbase One members are offered 3.75% on USDC, PayPal advertises 4% on PYUSD and Kraken+ subscribers can earn up to 4.5% on USDG. A June BIS bulletin found that Coinbase’s USDC yield moves with the policy rate because it passes on income from the token’s reserves.
How an issuer-funded reward reaches a holder
Cash and short-term government debt backing the token earn interest for the issuer.
The issuer shares part of that income with a distribution partner. When the issuer falls under the OCC, this is the payment its examiners can assess.
The platform pays a reward on stablecoin balances held with it.
Which regulator can ask those questions depends on the issuer’s charter. USDC, for example, is set to be issued by a New York trust company rather than Circle’s OCC-chartered national trust bank.
No head start for older programs
The OCC was urged to treat rewards that predated the GENIUS Act as compliant, on the grounds that Congress knew about them when it passed the law. The agency declined, saying Congress’s awareness of a program is not necessarily an endorsement.
For someone earning a reward today, nothing in the rule switches it off on January 18. The practical risk is a change in terms if an issuer’s regulator objects to how the payments behind it are funded.
Why banks wanted the presumption kept
Banks see stablecoin rewards as a threat to their deposit base and pushed to tighten the yield rules through the CLARITY Act, the market-structure bill. That fight helped stall the legislation, which failed a key Senate vote in September.
Commenters asked the OCC to account for the chance that Congress would still rewrite the yield rules. The agency replied that until such a law passes, it must implement the GENIUS Act’s yield prohibition as enacted, leaving the 2025 wording in place.
Research on banks competing with stablecoins by paying savers more describes a BIS working paper that found rises in US deposit rates were followed by slower stablecoin growth between 2019 and mid-2025, with USDC more sensitive than USDT. Banks can hold on to balances by paying more, but that narrows their margins. Tighter limits on stablecoin rewards would spare them some of that cost.
What issuers must fund besides reserves
Interest on reserves is the main way a fiat-backed issuer earns money, and the rule adds costs that compete with any share paid to partners. Reserves must back every token in circulation. On top of that, the final text requires at least $5 million of capital, more where risk warrants, and an operational backstop covering 12 months of total expenses.
| Requirement | Final rule | Versus February proposal |
|---|---|---|
| Reserve diversification | Principles-based, with minimum daily liquidity and single-counterparty limits | Revised |
| Minimum capital | At least $5 million, higher where risk warrants | $5 million floor carried over |
| Operational backstop | 12 months of total expenses; qualifying debt can fund up to half | 12-month length carried over |
The backstop exists to keep an issuer running through a disruption. It is separate from the reserves owed to holders and from the capital that absorbs losses. Letting debt cover up to half of it reduces the equity a new issuer must raise, but both the capital and the backstop have to be in place however much reserve income an issuer shares with partners.
January 18 and the approval gap
January 18 is the outer limit the GENIUS Act set for its own effective date, 18 months after President Donald Trump signed it, and the rule takes effect the same day. The application process has not opened yet. The OCC will accept applications and waiver requests only after the Office of Management and Budget approves the related information collection, and it has not said when that will happen.
Feb 25, 2026 – OCC publishes its proposal
Oct 21, 2026 – Final rule released
Jan 18, 2027 – Rule and GENIUS Act take effect
Jan 25, 2027 – First weekly report due
Mar 31, 2027 – First quarterly report due
No date yet – OMB approval that opens applications and waiver requests
The timing is tightest for issuers already operating in the United States. Under the OCC’s waiver guidance, a qualifying issuer with a substantially complete application pending by January 18 can ask to keep operating while the agency decides. The OCC expects to grant those requests for existing US operators unless its review turns up stronger grounds to refuse. Relief lasts up to a year and will be limited to the time the review needs.
The waiver covers prior approval only. The OCC says it sees no general reason to waive the rule’s other requirements, so an issuer operating under a waiver is still expected to meet them. Companies not yet operating in the United States should generally obtain approval before they launch.
Both reporting dates depend on OMB approval of the revised reporting forms, which remain open for public comment.
What the rule leaves open
Bank Secrecy Act, anti-money-laundering and sanctions rules will come through a separate rulemaking with Treasury. The FDIC, the Federal Reserve and Treasury also have GENIUS Act proposals in progress, and not all of them are likely to be final by January.
On rewards, the first tests will come in application reviews, where examiners see the contracts between issuers and the platforms that pay holders. Supervisory findings are generally confidential, so the market may learn the outcome only through changed reward terms or further OCC guidance.
This article is provided for informational purposes only and does not constitute legal, financial or investment advice.
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.
