The U.S. Office of the Comptroller of the Currency (OCC) has finalized its first set of regulations under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, requiring crypto exchanges that offer stablecoin rewards to seek regulatory approval for their existing programs.
The OCC, which supervises national banks and trusts expected to play a key role in issuing stablecoins, published its final rule on Wednesday. The framework establishes operating requirements for dollar-pegged token issuers, including rules governing their relationships with third-party platforms that distribute and trade stablecoins.
However, the agency has not provided clear examples of which rewards programs would breach the GENIUS Act. The legislation prohibits payments made “solely in connection with the holding, use, or retention” of payment stablecoins. With no automatic exemption for existing programs, companies must rely on the OCC’s case-by-case assessments to determine whether their offerings comply. The regulation is scheduled to take effect on January 18.
The OCC said it would evaluate individual arrangements based on the statutory language and their specific circumstances. It also emphasized the term “solely,” indicating that rewards tied partly to other activities or purposes might not fall under the law’s prohibition.
Payment stablecoins are designed to maintain a consistent value, typically by tracking the U.S. dollar. Tether’s USDT and Circle’s USDC remain leading tokens in the sector, while new competitors continue entering the market.
The final regulation outlines the procedures for domestic regulated institutions and foreign companies seeking to issue stablecoins in the United States. It also establishes requirements for custody and third-party relationships. Other aspects of the GENIUS Act will be addressed through separate regulatory efforts, including Bank Secrecy Act provisions handled by other Treasury Department agencies.
Treasury Secretary Scott Bessent said the OCC’s rule advances the legislation by providing a practical framework intended to encourage private-sector innovation, competition and U.S. leadership in digital assets.
Stablecoin Rewards Remain a Major Regulatory Dispute
Several financial companies, including Coinbase, already offer stablecoin rewards programs that resemble incentives provided by credit card companies. PayPal and Kraken are among the platforms offering relatively high returns on eligible holdings.
The GENIUS Act’s restriction on stablecoin issuers paying interest-like rewards directly to token holders has become one of the most controversial aspects of the legislation. The OCC received substantial industry feedback on the issue after publishing its initial proposal.
Banking groups have argued that stablecoin rewards could draw customer funds away from traditional bank deposits, threatening a key source of funding for their businesses. Banks pushed for additional restrictions through the proposed Digital Asset Market Clarity Act and continued lobbying on the issue. The dispute contributed to difficulties securing unanimous Republican support during a key Senate vote last month, preventing the market-structure bill from advancing.
Without those proposed changes, the existing GENIUS Act remains the legal standard governing stablecoin rewards offered by platforms such as Coinbase. Despite concerns from traditional lenders, bank deposits have continued to increase alongside growing interest in stablecoins.
The OCC’s final rule also addressed comments suggesting that the Digital Asset Market Clarity Act could eventually modify the restrictions. The agency maintained that it must enforce the GENIUS Act as written unless Congress passes new legislation.
When the OCC first proposed its regulations earlier this year, crypto firms were uncertain about how the agency would enforce provisions intended to prevent companies from circumventing the ban on issuer-paid yields. Some industry participants have since interpreted the framework as potentially allowing certain rewards offered through separate platforms.
PayPal reportedly offers a 4% return on PYUSD holdings, Coinbase One provides 3.75% on eligible USDC positions, and Kraken+ subscribers can earn up to 4.5% on USDG accounts.
Nevertheless, the OCC stressed that rewards programs established before the GENIUS Act are not automatically compliant. It also explained that Congress’s awareness of such programs does not necessarily mean lawmakers intended to authorize them.
The final version also removes certain “rebuttable presumptions” contained in the earlier proposal, which had treated specified activities as presumed violations unless companies could demonstrate otherwise.
Federal Agencies Continue Work on Stablecoin Regulations
The OCC’s rule represents only one stage of the GENIUS Act’s implementation. The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. are also developing regulations governing different aspects of the stablecoin industry.
Although the legislation established a midyear deadline for regulatory implementation, several agencies have not completed their work.
- FDIC: The agency released application standards late last year and proposed rules in April for state-chartered institutions.
- Treasury Department: Treasury proposed its approach in August, including questions about how foreign issuers such as Tether would be regulated. Earlier, in April, the Financial Crimes Enforcement Network and Office of Foreign Assets Control jointly proposed compliance measures for stablecoin businesses, including the ability to block or freeze transactions and requirements under the Bank Secrecy Act.
- Federal Reserve: Last month, the central bank proposed procedures and standards covering capital and reserves for subsidiaries of member banks seeking to issue stablecoins.
The GENIUS Act was expected to reach its overall effective date in January, but ongoing regulatory work and public consultation periods make it unlikely that all required rules will be completed before then.
OCC officials said the new framework could open the stablecoin sector to a broader range of financial institutions, including community banks.
The agency also revised its reserve provisions in the final rule, adopting a principles-based approach to asset diversification and concentration. These requirements are intended to ensure sufficient daily liquidity while limiting excessive exposure to any single counterparty.
