OCC leaves stablecoin rewards to case-by-case review

The Office of the Comptroller of the Currency finalized rules on Oct. 21 for payment stablecoins, keeping a ban on issuers paying holders interest solely for holding, using or retaining their coins while leaving third-party reward arrangements to individual review. The rule takes effect Jan. 18, 2027, according to the OCC’s final rule in the Federal Register.

The decision sets how the agency will apply the GENIUS Act’s yield prohibition to stablecoin issuers it supervises. It does not amount to blanket approval for crypto platforms to pay rewards: the OCC says it will assess arrangements under the facts and circumstances of each case.

How does a stablecoin reward work?

A payment stablecoin is designed to hold a steady value against money such as the U.S. dollar. Its issuer maintains reserves to support that value; those reserves can include bank deposits or U.S. Treasuries, which may earn interest. A platform that holds or trades the coin can then offer its customer a reward, potentially funded from earnings associated with the stablecoin. The Associated Press describes exchanges such as Coinbase and Robinhood passing earnings to customers as interest-like rewards.

The law draws a line at the issuer: it cannot pay a holder interest or yield solely because that person holds, uses or retains the stablecoin. That restriction applies to retail and institutional holders alike. The OCC’s rule addresses a different step in the chain: whether an issuer’s arrangements with a platform or other third party are a way to make a prohibited payment indirectly.

Why didn’t the OCC ban all third-party rewards?

The OCC had proposed a rebuttable presumption that certain transactions with affiliates and related third parties violated the yield ban. In the final rule, it removed that presumption, saying the payment-stablecoin market is still new and that the proposed test could sweep in permitted arrangements while missing prohibited ones. Instead, it will apply the law to each arrangement’s relevant facts and circumstances.

That leaves platforms room to offer rewards, but not a safe harbor. The OCC says it retains authority to address evasion of the law, and it declined to publish a list of permitted or prohibited reward structures. The Associated Press report notes that banks have warned such programs could pull deposits from the banking system; the OCC’s rule does not settle that wider dispute.

What changes when the rule takes effect?

Until Jan. 18, 2027, the final rule has not yet taken effect. After that date, the OCC’s stablecoin framework will set requirements for issuers under its jurisdiction, including rules covering reserves, redemption, risk management and supervision. The agency says it will monitor issuer applications and ongoing operations, assessing reward arrangements as it encounters them.

For stablecoin holders, the distinction to watch is who funds a reward and why: issuer-paid yield solely for holding a coin remains prohibited, while a third party’s program will depend on how the arrangement works in practice. The next test will be how the OCC applies that case-by-case standard as the framework begins.

References

• OCC’s final rule in the Federal Register — govinfo.gov
• Associated Press report — apnews.com