OCC rule leaves stablecoin rewards open to case-by-case review

The Office of the Comptroller of the Currency (OCC) issued a final rule on Oct. 21 that bars stablecoin issuers from paying holders interest or yield directly, while leaving some customer rewards through exchanges open to case-by-case review. The rule implements the GENIUS Act and takes effect Jan. 18, 2027. As the Associated Press reported, exchanges such as Coinbase and Robinhood may pass earnings on stablecoin holdings to customers as rewards, depending on how each arrangement works.

How can rewards reach holders if issuers are barred from paying yield?

The rule separates the stablecoin issuer from an intermediary such as an exchange. Stablecoins are designed to hold a steady value, often one dollar, and their reserves can include bank deposits and U.S. Treasuries that earn interest. An issuer cannot pay that interest or yield directly to a person simply for holding its payment stablecoin. An exchange that trades or holds the coin is a separate party: it may pass earnings to customers through a rewards program, but the rule does not give every such program automatic clearance.

Think of the issuer and exchange as two steps in a payment chain. The issuer creates the coin and holds reserves; the exchange serves the customer and may distribute a reward. The key question is whether the payment through that intermediary is, in substance, only for holding, using or retaining the coin.

What will the OCC examine in an exchange rewards program?

The OCC says it will assess third-party arrangements “case-by-case,” based on their facts and circumstances. In the final rule, it says an intermediary payment might be made solely because someone holds, uses or retains a payment stablecoin, or partly for other reasons. The rule also says transaction-based payments are not prohibited if they do not amount to interest or yield, or are not made solely in connection with holding, using or retaining the stablecoin. That leaves the arrangement’s structure and purpose central to the review.

The OCC’s announcement of the final rule says it sets requirements for permitted payment stablecoin issuers and certain custody activities overseen by the agency. It received hundreds of comments on its proposal. Anti-money-laundering and sanctions requirements will be handled in a separate rulemaking with the Treasury Department.

What changes now, and what happens next?

The final rule settles the OCC’s implementation framework ahead of its Jan. 18, 2027 effective date, while preserving case-by-case scrutiny of intermediary rewards. Banks have warned that stablecoin rewards could draw deposits out of the banking system; the American Bankers Association said the decision threatens funds banks use to make loans, according to AP. The OCC says it will monitor how the industry develops and may adjust its supervisory framework. The next point to watch is how it applies the test to specific reward arrangements.

References

• Associated Press reported — apnews.com
• OCC’s announcement of the final rule — occ.gov