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

The Office of the Comptroller of the Currency’s final rule implementing the GENIUS Act bars covered stablecoin issuers from paying holders interest or yield solely for holding, using or retaining their coins, while leaving some intermediary reward arrangements to case-by-case review. The Associated Press’s report on the rule says exchanges may pass earnings to customers as interest-like rewards; the rule does not grant exchanges a blanket right to do so.

What payments does the GENIUS Act prohibit?

The statutory prohibition applies to a permitted payment stablecoin issuer or foreign payment stablecoin issuer that pays any form of interest or yield, whether in cash, tokens or other consideration, solely in connection with a holder’s holding, use or retention of a payment stablecoin. The OCC’s final rule implements that restriction for entities under its jurisdiction. It takes effect January 18, 2027, according to the final rule published in the Federal Register.

The distinction at issue is who pays and why. Stablecoin issuers such as Circle are subject to the direct prohibition. An exchange or other intermediary may pay a customer, but the OCC says the statutory test depends on whether the payment is yield and whether it is made solely because the customer holds, uses or retains the coin. A payment made partly for another reason may fall outside that prohibition; its label as a “reward” does not settle the question.

Does the rule automatically permit exchange rewards?

No. The OCC will assess intermediary arrangements based on their facts and circumstances. It removed a proposed rebuttable presumption that would have treated certain issuer payments through affiliates or related third parties as prohibited yield to holders. Removing that presumption means those arrangements are not automatically presumed to violate the restriction; it does not create a safe harbor for exchange rewards.

The OCC says it retains authority to address evasion. It may examine the substance of an arrangement where a payment is nominally made for another purpose but is structured to evade the prohibition. The final rule also says the OCC will evaluate older rewards programs under the same standard as programs created after the GENIUS Act; their prior existence does not establish that they comply.

How are transaction-based rewards treated?

A transaction-linked payment is not automatically prohibited or automatically exempt. The rule says it falls outside the prohibition if it is not interest or yield, or if it is not made solely in connection with holding, using or retaining a payment stablecoin. Whether it meets either condition is a fact-specific inquiry the OCC says it will address as particular arrangements arise.

That leaves room for payments tied to genuine activity beyond passive balances, but the final rule does not list approved programs or define a universal threshold. The OCC declined to adopt a safe harbor or publish examples of permitted arrangements. A program’s design, funding and actual purpose therefore matter: an intermediary payment can still raise questions if the issuer is effectively paying holders through that intermediary for retaining its stablecoin.

References

• Associated Press’s report on the rule — apnews.com
• final rule published in the Federal Register — govinfo.gov