OCC Takes Fresh Look at Stablecoin Rewards and GENIUS Act Limits

The U.S. Office of the Comptroller of the Currency (OCC) has issued its first finalized regulations under the GENIUS Act, requiring cryptocurrency exchanges that offer stablecoin rewards to seek approval for their existing programs.

The OCC, which supervises national banks and trusts expected to play a major role in stablecoin issuance, published the final rule on Wednesday. The framework sets out operational requirements for companies issuing dollar-pegged tokens, including rules covering their relationships with third-party platforms that facilitate stablecoin trading.

The regulator has not provided specific examples of rewards programs that would violate the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The law prohibits payments made “solely in connection with the holding, use, or retention” of payment stablecoins. Because existing programs are not automatically exempt, companies must assess their offerings under the OCC’s case-by-case supervisory approach. The regulation is scheduled to take effect on January 18.

The OCC said it would evaluate individual arrangements based on the statutory language and their specific circumstances. It also emphasized the significance of the word “solely,” indicating that rewards linked partly to other activities could potentially fall outside the prohibition.

Payment stablecoins generally track the U.S. dollar to maintain a relatively stable value in the volatile cryptocurrency market. Tether’s USDT and Circle’s USDC remain the sector’s leading tokens, while additional competitors continue entering the market.

The final rule establishes procedures for regulated U.S. institutions and foreign companies seeking to issue stablecoins domestically. It also covers custody arrangements and relationships with third-party service providers. Other regulatory requirements under the legislation, including Bank Secrecy Act provisions, will be handled separately by other Treasury Department agencies.

Treasury Secretary Scott Bessent said the OCC’s regulations advance the legislation by establishing a practical foundation for private-sector innovation, competition and U.S. leadership in digital assets.

Stablecoin Reward Programs Face Regulatory Uncertainty

Several financial companies, including Coinbase, already offer rewards to stablecoin holders through programs resembling incentives provided by credit card companies. PayPal and Kraken are among the platforms offering relatively high returns on eligible balances.

The GENIUS Act’s restrictions on stablecoin issuers paying interest-like rewards directly to token holders have become a major point of contention. The OCC received extensive industry feedback after releasing its initial proposal.

Traditional banks have argued that stablecoin reward programs could encourage customers to move funds away from conventional bank deposits, threatening an important source of financing for lenders. Banking groups pushed for additional restrictions through the proposed Digital Asset Market Clarity Act and continued lobbying over the issue.

The disagreement contributed to difficulties securing unanimous Republican support during a key Senate vote last month, preventing the market-structure bill from advancing.

Without those proposed amendments, the existing GENIUS Act remains the legal standard governing rewards programs offered by exchanges such as Coinbase. Although banks have raised concerns about competition from stablecoins, traditional bank deposits have continued to increase.

The OCC’s final rule also addressed arguments that the Digital Asset Market Clarity Act could eventually revise the restrictions. The agency said it must enforce the current GENIUS Act until Congress approves new legislation.

When the OCC initially proposed its regulations earlier this year, crypto companies were uncertain about how the regulator would enforce provisions intended to prevent firms from bypassing restrictions on stablecoin yields. Some industry participants have since interpreted the framework as potentially allowing certain rewards through third-party platforms.

PayPal reportedly offers a 4% return on PYUSD holdings, Coinbase One provides 3.75% on eligible USDC balances, and Kraken+ subscribers can earn up to 4.5% on USDG accounts.

However, the OCC stressed that rewards programs established before the GENIUS Act are not automatically compliant. The agency also clarified that Congress’s awareness of existing programs does not necessarily indicate approval.

The final regulation removes certain “rebuttable presumptions” included in the earlier proposal, which would have presumed specific activities violated the rules unless companies demonstrated otherwise.

Federal Regulators Continue Developing Stablecoin Frameworks

The OCC’s finalized rule is one part of a broader effort to implement the GENIUS Act. The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. are also preparing regulations covering different aspects of stablecoin issuance and oversight.

Although the legislation established a midyear deadline for regulatory implementation, several agencies are still working on their proposals.

• FDIC: The agency issued application standards late last year and proposed regulations for state-chartered institutions in April.
• Treasury Department: Treasury proposed its approach in August, including provisions affecting foreign issuers such as Tether. Earlier, in April, the Financial Crimes Enforcement Network and Office of Foreign Assets Control jointly proposed compliance measures for stablecoin businesses, including transaction-blocking and freezing capabilities and obligations under the Bank Secrecy Act.
• Federal Reserve: Last month, the central bank proposed issuance procedures and capital and reserve requirements for subsidiaries of member banks planning to issue stablecoins.

The GENIUS Act’s overall effective date was expected in January, but ongoing regulatory proceedings and public comment periods could delay completion of the full framework.

OCC officials said the new rules could create opportunities for more financial institutions, including community banks, to participate in the stablecoin market.

The agency also revised its reserve requirements in the final version, adopting a principles-based approach to diversification and concentration. The updated framework is intended to maintain sufficient daily liquidity and limit excessive exposure to any single counterparty.