The American Bankers Association has challenged the OCC’s final implementation of the GENIUS Act over how regulators will treat indirect stablecoin rewards. The dispute centers on third-party yield arrangements rather than the law’s continuing prohibition on issuers directly paying holders interest, setting up a regulatory divide between banking and crypto industry groups ahead of the framework’s January 18, 2027 effective date.
The OCC finalized its GENIUS Act regulations on October 21, establishing requirements covering reserves, redemption, custody, capital and risk management. The final rule removed a proposed rebuttable presumption that would have treated certain arrangements between stablecoin issuers, affiliates and related third parties as presumptive violations of the yield prohibition, replacing it with supervisory review based on individual facts and circumstances.
That change drew immediate criticism from the ABA. The banking group argues that issuers could structure what it calls “economically equivalent yield” through exchanges, affiliates or distribution partners while technically avoiding a direct payment to stablecoin holders, potentially weakening the boundary between payment instruments and interest-bearing bank deposits.
OCC Drops Proposed Presumption but Keeps Yield Ban
The distinction is narrower than saying the OCC has allowed yield-bearing stablecoins. The statutory prohibition still prevents permitted payment stablecoin issuers from paying interest or yield solely for holding, using or retaining their tokens, and the OCC maintains authority to act against arrangements designed to evade that restriction.
Under the proposed framework published in February, certain issuer relationships with affiliates or third parties would have triggered a presumption that rewards ultimately reaching stablecoin holders represented prohibited yield. That approach was previously examined in the OCC’s proposed stablecoin yield rules, where indirect rewards became one of the most contested elements of federal stablecoin implementation.
The final rule abandons that presumption because the OCC concluded it risked being both overinclusive and underinclusive. Rather than publishing a fixed list of permissible and prohibited arrangements, the regulator intends to examine reward structures through licensing and ongoing supervision, taking enforcement action where it determines an issuer has violated or evaded the statutory ban.
Existing rewards programs receive no automatic protection. The OCC explicitly declined to grandfather stablecoin rewards that predate the GENIUS Act, meaning exchanges and other intermediaries cannot assume that an existing program is compliant simply because it was already operating when the law passed.
Banks and Crypto Groups Split Over Deposit Risk
The ABA argues that the supervisory approach leaves too much room for regulatory arbitrage. Its central concern is that stablecoin rewards could attract funds away from bank deposits, potentially raising funding costs and reducing the capital available for lending, an argument banking executives have repeatedly advanced throughout the broader stablecoin yield debate.
That outcome remains a projection rather than an established consequence of the final rule. Moody’s previously concluded that stablecoins were not yet creating a serious threat to bank funding, highlighting that actual deposit migration will depend on stablecoin scale, reward structures, customer behavior and where reserve assets ultimately sit within the financial system.
The Blockchain Association welcomed the OCC’s decision from the opposite perspective. The industry group said eliminating the presumption brings the regulation closer to the statutory text approved by Congress, while preserving what it described as workable standards for reserves, redemption and risk management.
The disagreement also continues a policy fight that extended into the CLARITY Act negotiations over stablecoin rewards. The unresolved issue is not whether issuers may directly pay yield, but how far regulators can trace economically linked rewards through third parties before those payments become attributable to the issuer.
The OCC expects supervisory experience to inform additional guidance and potentially another rulemaking as the market develops. That leaves reward programs operating without a broad safe harbor while giving the agency flexibility to determine when a third-party incentive crosses the line into prohibited issuer-funded yield after the GENIUS Act takes effect.
