US banking groups criticise OCC stablecoin rule over yield loophole

Key points

• The ABA and ICBA criticised the OCC's final GENIUS Act rule on Wednesday, 21 Oct.
• The ICBA estimates stablecoin adoption could cut community bank lending by at least $850bn.
• The ABA says the rule drops proposed safeguards on indirect yield paid via exchanges and affiliates.

Two US banking groups have challenged the Office of the Comptroller of the Currency over its final rule implementing the GENIUS Act, arguing that weak limits on stablecoin rewards could pull deposits away from traditional lenders. The American Bankers Association and the Independent Community Bankers of America made their objections on Wednesday, 21 Oct, Bitcoin.com News reports.

ABA president and CEO Rob Nichols said the framework abandons proposed safeguards against indirect stablecoin yield, leaving crypto platforms able to offer deposit-like incentives through exchanges, affiliates and other partners. He argued this undercuts Congress's intent to protect local lending. The ABA has previously joined 52 state bankers' associations in pressing for tighter restrictions on stablecoin rewards.

The dispute turns on whether firms other than stablecoin issuers should be allowed to pay interest-like rewards, which the banks say sidesteps the law's restrictions. The ABA, founded in 1875, represents an industry holding about $20.7tn in deposits and $13.9tn in loans. It says it supports regulated bank involvement in digital assets but opposes a consumer-facing US central bank digital currency.

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