Regulator’s GENIUS Plan Pressures Stablecoins

A sweeping new proposal from the U.S. Office of the Comptroller of the Currency (OCC) is sending shockwaves through the crypto sphere, raising fresh concerns that stablecoin rewards programs – a key revenue driver for major exchanges – could soon face tighter restrictions in the United States.

Stablecoin Yield in the Crosshairs

The 376-page rulemaking aims to implement last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. While the legislation formally governs domestic stablecoin issuers, early interpretations of the OCC’s proposal suggest it may also impact third-party platforms that offer rewards on stablecoin holdings.

Industry insiders say the initial language could put programs such as the partnership between Circle and Coinbase under pressure. At the heart of the controversy is whether stablecoin rewards, often framed as “yield” or incentive programs, violate the GENIUS Act’s prohibition on interest payments by issuers.

The OCC’s proposal warns that close financial relationships between issuers and crypto platforms could make it “highly likely” that yield payments routed through intermediaries would be viewed as attempts to evade the law’s ban on interest.

The regulator added that firms could rebut that presumption if they provide sufficient evidence that their programs do not violate statutory restrictions. This caveat has left the industry parsing the fine print.

Crypto firms have long assumed that, while the GENIUS Act bars issuers from directly paying interest, it does not prevent independent third parties such as exchanges from offering their own rewards programs tied to stablecoin activity.

The OCC’s draft language challenges that interpretation, though legal experts suggest the door may not be fully closed.

“Some Play in the Joints”

Todd Phillips, a former FDIC attorney and law professor who tracks digital asset policy, said the proposal stops short of issuing an outright ban.

“I think there’s some play in the joints of what the OCC has proposed. Language appears open to interpretation regarding whether it would shut down all forms of stablecoin rewards.”

He also argued that the agency may have gone beyond what the statute strictly requires – leaving room for pushback during the public comment process. The OCC has not yet publicly clarified its stance beyond the proposal’s text.

Clarity Act Complications

The timing adds another layer of complexity. Stablecoin yield has been one of the most contentious issues in negotiations over the Digital Asset Market Clarity Act – a broader bill designed to establish a comprehensive framework for U.S. crypto markets.

Banking groups have argued that stablecoin rewards resemble deposit accounts and could undermine traditional banks’ reliance on customer deposits. The crypto industry has countered that third-party rewards are permissible under the GENIUS Act and represent legitimate market innovation.

Some negotiators now question whether the OCC’s move undercuts the legislative process. If regulators restrict rewards through rulemaking, it could remove one of the Clarity Act’s major sticking points, though other disputes remain unresolved.

Among them are Democratic demands for stronger conflict-of-interest provisions, including restrictions aimed at preventing senior government officials from personally profiting from crypto-related ventures.

Political Pressure Mounts

During a Senate Banking Committee hearing, lawmakers pressed regulators on the potential risks of stablecoin rewards to the traditional banking system.

Senator Angela Alsobrooks, a Democrat involved in Clarity Act negotiations, emphasised the need to take community banks’ concerns seriously, particularly regarding products that may function like deposit accounts without equivalent oversight.

Regulators noted that, so far, they have not observed significant deposit flight from banks to crypto platforms.

What’s Next?

The OCC’s proposal is preliminary and now enters a public comment period – a process that could stretch months before any final rule is adopted. Historically, controversial financial regulations undergo substantial revision before becoming binding.

Still, uncertainty alone may weigh on crypto firms that rely heavily on stablecoin rewards as a competitive offering.

For companies like Coinbase, where stablecoin-related revenue is a meaningful business segment, the stakes are high. The exchange has declined public comment so far.

With the GENIUS framework still taking shape and the Clarity Act stalled in negotiations, the battle over stablecoin yield is shaping up to be a defining regulatory clash for the U.S. crypto sector in 2026.