OCC Finalizes GENIUS Act Rule

10/21/26

The Office of the Comptroller of the Currency (OCC) has finalized regulations implementing the GENIUS Act, establishing a federal regulatory framework for payment stablecoin issuers. While the final rule represents an important step toward providing regulatory clarity and establishing safeguards for the emerging stablecoin market, the OBL is disappointed that the OCC has removed key provisions intended to prevent stablecoin issuers from circumventing the law's prohibition on paying interest or yield.

The GENIUS Act, enacted in July 2025, established the first comprehensive federal framework for payment stablecoins, including requirements governing reserve assets, redemption, risk management, supervision and consumer protections. Importantly, Congress included a prohibition on stablecoin issuers paying interest or yield to holders, recognizing the need to distinguish payment stablecoins from traditional bank deposits.

Unfortunately, the OCC's final rule weakens the implementation of that prohibition, potentially allowing cryptocurrency platforms to continue offering interest-like rewards through arrangements with affiliates, exchanges and other third parties.

Under the OCC's original proposal, certain arrangements in which a stablecoin issuer provided compensation to an affiliate or distribution partner that subsequently paid yield to stablecoin holders would have been presumed to violate the statutory prohibition. That safeguard was intended to prevent issuers from accomplishing indirectly what Congress prohibited them from doing directly.

The final rule eliminates that presumption. Although stablecoin issuers remain prohibited from directly paying interest or yield, the OCC has elected to review potentially problematic third-party arrangements individually through its supervisory process rather than establish more explicit restrictions at the outset. The agency indicated that it may revisit the issue through future rulemaking as the stablecoin market develops. However, OBL remains concerned that waiting until deposit migration and other economic consequences become evident could leave regulators responding to harm after it has already occurred.

For Ohio's banks, this distinction is particularly consequential. Bank deposits are the foundation of local lending, supporting small businesses, agricultural operations, homeownership and economic development throughout the state. Allowing stablecoin platforms to offer deposit-like returns without comparable regulatory obligations could encourage consumers and businesses to move funds outside the traditional banking system. As deposits migrate away from community banks, institutions could face increased funding costs and diminished lending capacity. While stablecoin issuers are required to maintain reserve assets, those reserves do not necessarily return funding to the communities from which deposits originated.

OBL has consistently supported responsible financial innovation and the development of a regulatory framework for payment stablecoins. Our concern has never been with the technology itself, but rather ensuring that innovation does not create an uneven competitive environment that undermines traditional banking and the communities our members serve. Throughout the development of the GENIUS Act and subsequent discussions surrounding digital asset market structure legislation, OBL has advocated for stronger protections against interest and yield being offered by nonbank stablecoin platforms. Working alongside state and national banking associations, we have urged policymakers to close loopholes that could allow exchanges, brokers, affiliates and other intermediaries to offer economically equivalent returns while avoiding the restrictions placed on stablecoin issuers.

These concerns have been raised repeatedly with Congress and federal regulators, including through industry advocacy calling for clear prohibitions on indirect yield arrangements and greater regulatory consistency between banks and nonbank financial service providers.

Beyond the yield issue, the OCC's final rule establishes important requirements governing stablecoin issuers, including reserve backing, redemption procedures, risk management, custody, reporting and supervision. The OCC also released guidance outlining the process for stablecoin issuers to apply for regulatory approval and request limited transitional waivers. Existing issuers with qualifying pending applications may request waivers of certain requirements for up to 12 months.

The agency also published revised weekly and quarterly reporting forms intended to provide regulators with greater visibility into stablecoin issuers' financial condition, reserve holdings and operations. The revised forms remain subject to an additional public comment process. The final rule becomes effective January 18, 2027, with additional Bank Secrecy Act, anti-money laundering and sanctions-related requirements being addressed through separate rulemaking.

OBL Advocacy Continues

Despite the OCC's decision, the broader debate over stablecoin yield is far from settled. OBL will continue advocating with Congress and federal regulators to ensure that the prohibition established under the GENIUS Act cannot be circumvented through third-party arrangements. This issue will also remain central to our engagement on additional digital asset legislation, including the CLARITY Act and ongoing discussions regarding the appropriate regulatory treatment of stablecoin rewards and incentives. We believe the United States can establish a strong framework for digital asset innovation without jeopardizing the deposit funding that supports community banking. Achieving that balance requires consistent rules, effective safeguards against regulatory arbitrage and recognition of the essential role banks play in financing economic growth. OBL will continue working to ensure that Ohio banks are able to compete on a level playing field and that emerging financial technologies complement, rather than undermine, the financial institutions serving our communities.