The American Bankers Association has accused the Office of the Comptroller of the Currency of sidestepping Congress after the banking regulator dropped language that could have constrained stablecoin rewards programs offered through third-party cryptocurrency platforms.
The dispute centers on the OCC’s final rule implementing the GENIUS Act, the stablecoin law enacted last year. The law bars payment stablecoin issuers from paying interest directly to holders, but it does not expressly settle whether platforms unaffiliated with an issuer may offer rewards connected to stablecoin balances.
In its initial proposal, the OCC adopted the statutory ban on issuer-paid interest and added a presumption that certain business arrangements between issuers and third parties could violate the restriction. The final rule, released Wednesday, removed that presumption. The agency instead plans to assess rewards arrangements individually.
Rob Nichols, president and chief executive of the American Bankers Association, said the change leaves room for crypto platforms to continue offering yield and departs from Congress’s intended limits on stablecoin rewards.
Banks argue that stablecoin rewards can resemble deposit interest while operating outside the framework governing insured bank accounts. Their concern is less about the label attached to a payment than the potential movement of customer balances away from bank deposits, which help support consumer and business lending.
Banks warn of pressure on deposit funding
The GENIUS Act created a federal framework for payment stablecoins, requiring issuers under federal oversight to meet standards on reserves, redemptions and risk management. Payment stablecoins are designed to maintain a fixed value, typically one dollar, and are generally backed by liquid assets such as cash, short-term government debt or bank deposits.
Congress drew a line between those tokens and interest-bearing deposit products by prohibiting issuers from paying interest or yield. The unresolved issue is whether a separate platform can take stablecoins deposited by customers and distribute a reward without turning the issuer into the direct payer.
Nichols said the OCC’s revised wording could blur that boundary. If rewards programs become a common feature of stablecoin accounts, banks contend that consumers may view them as alternatives to deposits despite different legal protections, redemption structures and supervisory rules.
The banking industry has pressed that argument during debate over the Clarity Act, a separate bill intended to establish a broader market-structure framework for digital assets. That legislation has yet to advance in the Senate, leaving the rewards question caught between the GENIUS Act’s narrower text and a larger unresolved debate over how crypto intermediaries should be regulated.
The OCC’s decision does not formally authorize every rewards product. A regulatory official said Tuesday that arrangements will be assessed case by case, suggesting that the agency intends to examine contractual relationships, funding sources and issuer involvement rather than issue a blanket judgment.
That approach may give platforms flexibility, but it also leaves banks, stablecoin issuers and crypto businesses without a simple test for determining whether a particular program complies with the law.
Industry sees closer alignment with the statute
The Blockchain Association took the opposite view, arguing that the final rule more closely reflects the GENIUS Act’s actual wording. The organization’s chief policy officer said the OCC appropriately removed an expansive presumption that was not written into the statute.
That position rests on a narrow reading of the law: issuers cannot pay interest on payment stablecoins, while independent companies remain subject to analysis based on the structure of their own services. Under that interpretation, the OCC’s role is to supervise federally regulated issuers rather than extend the interest prohibition automatically to every company that handles a stablecoin.
The distinction could prove commercially important for platforms that use rewards to attract customer balances. A third party may fund such programs from its own revenue, lending activity, staking arrangements, promotional budgets or other sources, depending on the asset and service involved. Whether those structures comply with the GENIUS Act could depend on how closely the issuer participates and whether the arrangement effectively routes issuer-funded yield through another company.
The final rule therefore places greater weight on individual enforcement decisions and potential legal challenges. Jaret Seiberg, managing director and head of Washington Research at TD Cowen, said in a Wednesday note that the case-by-case approach creates uncertainty for banks. He added that ambiguity could remain until courts address the issue and that regulatory policy could change under a future comptroller appointed after the 2028 presidential election.
The rule focuses on issuers, not every crypto product
The OCC rule primarily establishes standards for federally supervised stablecoin issuers, including requirements involving reserve assets, redemption obligations and risk controls. Those provisions address whether a token can reliably be redeemed at par, a core concern for a payment instrument marketed as stable in value.
They do not create a general approval for high-return products built around stablecoins. A platform advertising rewards would still face questions under applicable securities, commodities, consumer-protection, banking and state laws, depending on the structure of its product. The removal of the OCC’s presumption changes the federal banking rule’s treatment of issuer relationships; it does not eliminate those separate legal constraints.
For banks, the outcome preserves a policy fight they had hoped the OCC would settle more decisively. For crypto platforms, it avoids an automatic restriction that could have limited rewards programs tied to stablecoin holdings. The next stage will likely unfold through supervisory decisions, agency interpretations and, potentially, litigation over where Congress intended the ban on stablecoin interest to end.
For deeper policy insight on GENIUS and stablecoins, read this GENIUS Act stablecoin analysis now.
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