Quick Take
- The OCC dropped the proposed affiliate rewards presumption while retaining the GENIUS Act’s issuer yield ban.
- Existing rewards programs receive no grandfathering, while the OCC rejected a safe harbor for small yield payments.
- Rewards arrangements will face review on their facts through issuer applications and supervision, with no list of approved structures.
The Office of the Comptroller of the Currency (OCC) dropped a proposed presumption against certain stablecoin rewards routed through affiliates or related third parties in its Oct. 21 final GENIUS Act rule. The rule retains the prohibition on issuers paying holders interest or yield solely for holding, using or retaining a payment stablecoin, with older rewards programs facing the same scrutiny as newer ones.
The rule takes effect on Jan. 18, 2027. It covers permitted and foreign payment stablecoin issuers within the OCC’s jurisdiction and certain custody activities by OCC-supervised entities. Comptroller Jonathan V. Gould, posting as @USComptroller on X, said the agency had delivered the final rule ahead of schedule.
For exchange-run rewards, CryptoSlate’s reading is that removing the proposed test leaves the legality of individual arrangements unsettled. The change follows CryptoSlate’s earlier coverage of exchange stablecoin rewards.
CryptoSlate separately examined the rule’s reserve changes and banks’ deposit-flight concerns.
How the OCC will assess rewards
The proposal would have presumed that certain linked arrangements amounted to prohibited issuer yield: an issuer would pay interest or yield to an affiliate or related third party, which would in turn arrange payments to holders solely for holding, using or retaining the issuer’s stablecoin.
The proposed presumption would have applied to those specified payment relationships. The final rule removes it and retains the statutory yield prohibition.
The agency said the proposed test could have caught permissible arrangements while suggesting that impermissible arrangements outside its triggers were acceptable. Requiring a rebuttal in those circumstances risked imposing burdens without a matching benefit.
Instead, the OCC will apply the statute to the facts of each arrangement. It has not provided a list of permitted or prohibited rewards structures.
Its anti-evasion authority also remains. The rule explains that an issuer cannot avoid the prohibition simply by paying an agent to make interest or yield payments on its behalf that it could not make directly.
Transaction-based payments also require an assessment of the particular facts. Payments that do not constitute interest or yield, or that are not made solely in connection with stablecoin holding, use or retention, fall outside the statutory prohibition.
Rewards programs that predate the GENIUS Act will be evaluated in the same way as programs established after enactment or the law’s effective date.
The regulator also declined a de minimis safe harbor for small or incidental yield payments, saying the statute contains no exemption for them.
The rule’s rewards provisions apply the issuer yield prohibition equally to institutional and retail stablecoin holders. The rule also offers no cure period for violations, although the OCC says it will exercise enforcement discretion according to the circumstances.
Applications and supervision come next
The OCC will initially monitor arrangements through issuers’ applications and ongoing supervision. Where it identifies transactions that violate or evade the yield prohibition, it says it will take action and provide additional public guidance as appropriate.
The OCC says GENIUS Act rules on the Bank Secrecy Act, anti-money laundering and sanctions will be addressed in separate rulemaking coordinated with Treasury. The OCC decision is also distinct from the Treasury foreign-stablecoin diligence proposal previously covered by CryptoSlate.
Alongside the rule, the OCC released Paperwork Reduction Act notices covering licensing and registration applications and weekly and quarterly reporting forms. Each specifies a comment deadline 30 days after Federal Register publication; the posted copies leave the calendar deadlines unfilled.
The Jan. 18 effective date is separate from the application opening. The OCC’s announcement says another news release will specify when it begins accepting and processing prospective issuers’ applications and waiver requests.
The OCC anticipates that experience with these arrangements could support a later rule clarifying the yield prohibition.
Editorial credits
