The US Office of the Comptroller of the Currency's final rule implementing the Guiding and Establishing National Innovation for US Stablecoins Act leaves the door open for stablecoin customers to receive yield or rewards.
The OCC's original proposal included a provision stating that offering yield through a third party, affiliate or other intermediary would violate the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act's ban on stablecoin yield payments. But the agency's final rule, released Oct. 21, removed that presumption. Instead, it said it will evaluate third-party yield arrangements on a case-by-case basis.
The change is a "setback" for the bank industry, according to Raymond James Washington policy analyst Ed Mills.
"We are not particularly surprised by the walkback given the administration's broader pro-crypto regulatory stance, but it represents a meaningful departure from the OCC's February proposal and from the banking industry's expectation that regulators might close the rewards loophole following the collapse of CLARITY Act negotiations in September," Mills wrote in a note.
The analyst called the change "incrementally favorable" for cryptocurrency exchanges, stablecoin issuers and digital asset platforms.
"We believe this leaves the [banking] industry's most important policy dispute unresolved while potentially strengthening the negotiating position of crypto firms in any renewed market structure discussions," Mills wrote.
The OCC is the first federal bank regulator to finalize its GENIUS Act rule. "We will be watching whether other regulators ultimately follow the OCC's case-by-case approach to third-party rewards or retain more prescriptive restrictions in their own rulemaking," Mills wrote.
The banking industry has opposed stablecoin yield and rewards, arguing they could erode banks' deposits. The topic was expected to be addressed in the CLARITY Act, but the bill stalled in September.
"Those gaps risk undermining the distinction Congress drew between payment stablecoins and traditional bank deposits, threatening the funds banks use to make the loans that drive the U.S. economy. And while we appreciate the OCC's recognition that additional supervisory experience may inform future action in this area, attempting to address deposit flight and economic harm after it has occurred is the wrong approach," American Bankers Association President and CEO Rob Nichols said in a statement after the final rule was unveiled.
In a separate statement, the Independent Community Bankers of America pointed to its May letter urging the OCC to ban all forms of stablecoin yield and rewards. The group estimated that community banks could lose $1 trillion in deposits, resulting in an $850 billion decline in lending.
