The U.S. Office of the Comptroller of the Currency (OCC) has finalized its first regulatory framework under the GENIUS Act, requiring cryptocurrency exchanges that offer stablecoin rewards to obtain approval for their existing programs.
The OCC, which oversees national banks and trusts expected to play a significant role in stablecoin issuance, released the final regulations on Wednesday. The rules establish operating standards for companies issuing dollar-backed tokens, including requirements governing their partnerships with third-party platforms that facilitate stablecoin trading.
However, the regulator has not specified exactly which rewards arrangements would violate the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The legislation prohibits payments made “solely in connection with the holding, use, or retention” of payment stablecoins. Since existing programs receive no automatic exemption, companies will need to demonstrate compliance under the OCC’s case-by-case review process. The rules are scheduled to take effect on January 18.
The agency said it would examine each arrangement according to the law and the circumstances surrounding the program. It also highlighted the word “solely” in the legislation, suggesting that rewards connected partly to other activities or purposes could fall outside the restriction.
Payment stablecoins are designed to maintain a relatively constant value, usually by tracking the U.S. dollar. Tether’s USDT and Circle’s USDC lead the market, although an increasing number of companies are introducing competing products.
The OCC’s final framework covers the process for domestic regulated institutions and foreign companies to issue stablecoins in the United States. It also establishes requirements for custody and relationships with third-party service providers. Other elements of the legislation, including Bank Secrecy Act obligations, will be addressed separately by other Treasury Department agencies.
Treasury Secretary Scott Bessent said the final rule advances the legislation by establishing a practical foundation for innovation, competition and American leadership in the digital asset sector.
Stablecoin Yield Restrictions Remain Controversial
Several financial companies, including Coinbase, already provide rewards programs for stablecoin holders. These offerings resemble customer incentives commonly used by credit card companies, with PayPal and Kraken among the platforms advertising relatively high returns on eligible balances.
The GENIUS Act’s prohibition on stablecoin issuers paying interest-like rewards directly to token holders has sparked considerable debate. The OCC received numerous industry comments after publishing its initial regulatory proposal.
Traditional banking groups have argued that these programs could encourage customers to move money away from bank deposits, threatening an important source of funding for lenders. Banks subsequently pushed for additional restrictions through the proposed Digital Asset Market Clarity Act.
The dispute continued during negotiations over the market-structure legislation and contributed to difficulties securing unanimous Republican support in a key Senate vote last month, preventing the bill from advancing.
Without those proposed amendments, the existing GENIUS Act remains the primary legal framework governing rewards programs offered by exchanges such as Coinbase. Although banks have warned about the competitive threat posed by stablecoins, traditional bank deposits have continued to grow.
The OCC also addressed industry comments suggesting that the Digital Asset Market Clarity Act could eventually revise the restrictions. The regulator maintained that it must enforce the existing GENIUS Act until Congress passes new legislation.
When the OCC first proposed its rules earlier this year, crypto companies were uncertain about how regulators would enforce provisions designed to prevent firms from circumventing the yield restrictions. Some industry participants have since interpreted the approach as leaving room for rewards offered through separate platforms.
PayPal reportedly provides a 4% return on PYUSD holdings, Coinbase One offers 3.75% on eligible USDC balances, and Kraken+ subscribers can receive up to 4.5% on USDG accounts.
Nevertheless, the OCC emphasized that rewards programs established before the GENIUS Act are not automatically compliant. The regulator also noted that lawmakers’ awareness of existing programs does not necessarily mean Congress intended to approve them.
The final rule removes certain “rebuttable presumptions” included in the earlier proposal, which would have treated specified activities as presumed violations unless companies provided evidence to the contrary.
Additional Federal Agencies Prepare Stablecoin Rules
The OCC’s decision represents only one part of the broader regulatory effort under the GENIUS Act. The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. are developing additional requirements covering other aspects of the stablecoin industry.
Although the legislation called for regulators to meet a midyear deadline, several agencies are still working on their respective rules.
- Federal Deposit Insurance Corp. (FDIC): The agency released application standards late last year and proposed a framework in April for regulating state-chartered institutions.
- Treasury Department: Treasury proposed its approach in August, including provisions affecting foreign issuers such as Tether. In April, the department’s Financial Crimes Enforcement Network and Office of Foreign Assets Control also proposed compliance requirements for stablecoin businesses, including the ability to block or freeze transactions and obligations under the Bank Secrecy Act.
- Federal Reserve: Last month, the central bank proposed procedures and capital and reserve standards for subsidiaries of member banks seeking authorization to issue stablecoins.
The GENIUS Act’s overall effective date was expected to arrive in January. However, the remaining regulatory proceedings and public comment periods could prevent all required rules from being finalized before that deadline.
OCC officials said the new framework could allow a wider range of financial institutions, including community banks, to participate in stablecoin issuance.
The agency also revised its reserve requirements in the final version, adopting a principles-based approach to asset diversification and concentration. The framework includes safeguards intended to maintain minimum daily liquidity and prevent excessive exposure to individual counterparties.
