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OCC says existing stablecoin rewards need approval under GENIUS Act

The US banking regulator has issued its first final rule under the GENIUS Act, saying pre-existing stablecoin rewards programmes get no special treatment when it judges which ones comply.

Why it matters: The rule decides how exchanges such as Coinbase, PayPal and Kraken can keep paying stablecoin rewards, a business line banks have fought hard against.

InvestIn.News NewsDesk · 1 min read
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Image: CoinDesk
Original reporting: Jesse Hamilton, CoinDesk

Key points

  • The OCC's final rule takes effect on 18 January and covers issuance, custody and third-party exchange relationships.
  • PayPal offers 4% on PYUSD, Coinbase One 3.75% on USDC and Kraken+ up to 4.5% on USDG accounts.
  • The Treasury, Federal Reserve and FDIC are still writing their own GENIUS Act rules after missing a mid-year deadline.

US crypto exchanges will have to win the Office of the Comptroller of the Currency's approval for their existing stablecoin rewards programmes, after the regulator issued its first final rule under the GENIUS Act. The OCC, which supervises national banks and trusts, published the rule on Wednesday. It sets out how dollar-based token issuers will operate, including their dealings with the exchanges where their stablecoins trade. The rule takes effect on 18 January.

The OCC declined to give examples of which rewards arrangements might breach the GENIUS Act, which bars payments made "solely in connection with the holding, use, or retention" of a payment stablecoin. The agency said it would apply the statute to the facts of each arrangement, and suggested the word "solely" matters: a reward made at least partly for other reasons would fall outside the ban. It also said it would not presume that programmes predating the law comply, and dropped proposed rebuttable presumptions.

Banks and yield fight

Yield has been the most contested part of stablecoin regulation. PayPal pays 4% on PYUSD, Coinbase One 3.75% on USDC and Kraken+ up to 4.5% on USDG accounts. Banks have called such programmes a threat to deposits and pushed to amend the GENIUS Act through the CLARITY Act, which failed to advance in a Senate vote last month. The OCC said it must enforce the yield ban as enacted unless and until that legislation passes.

Other regulators are still working.

What to watch: Other agencies, including the Treasury, the Federal Reserve and the FDIC, are still taking public comments on their own GENIUS Act rules.

Read the full story on CoinDesk

Live updates on NewsFeeds:RegulationStablecoinsDesk editor: Keshav Aggarwal (accountable for this page; this summary was not edited by hand)

How this was produced: an AI model wrote this summary of CoinDesk’s report, which we credit and link above. Read our Editorial and AI policy. Spotted a mistake? See Corrections.

Not investment advice. Read the risk disclaimer.

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