OCC Stablecoin Rule Under GENIUS Act Sparks Debate Over Crypto Yield Restrictions

The Office of the Comptroller of the Currency (OCC) has released a 376-page notice of proposed rulemaking to implement oversight of stablecoins under the newly enacted GENIUS Act. While much of the proposal outlines standard regulatory requirements such as custody controls, capital standards, and compliance expectations, one section has ignited debate across the crypto industry: restrictions on stablecoin yield payments.

At the center of the controversy is language stating that permitted payment stablecoin issuers “must not pay the holder of any payment stablecoin any form of interest or yield” solely for holding or using the token. The OCC also warned that issuers could attempt to distribute yield through third-party arrangements and indicated it would presume such payments are yield-related if contracts suggest that purpose. Companies would have the opportunity to rebut that presumption with supporting evidence.

This interpretation has raised concerns that the OCC may be positioning itself to limit or effectively ban yield offerings tied to stablecoins, including programs run through affiliated partners. Some industry observers argue the proposal stretches beyond the authority granted under the GENIUS Act, while others believe it aligns with the law’s statutory language and does not amount to an outright prohibition.

The proposal’s definition of “affiliate” adds another layer of complexity. If a stablecoin issuer holds a 25% or greater ownership stake in a partner company, that entity may face restrictions on offering yield. This could affect major crypto firms such as Coinbase and Circle, as well as arrangements like PayPal and Paxos’ PYUSD structure. Companies may need to restructure agreements to resemble loyalty or rewards programs rather than traditional interest payments.

The outcome remains uncertain. Pending market structure legislation in Congress could further reshape U.S. stablecoin regulation, including how yield is treated. If new laws are enacted before the OCC finalizes its rules, regulators may need to revise the proposal, potentially altering the future of stablecoin yield in the United States.