- The ABA opposes the OCC’s decision to review third-party stablecoin rewards case by case, citing potential deposit flight and reduced bank lending.
- The OCC grants stablecoin issuers more reserve flexibility while retaining one-to-one backing, liquidity safeguards and redemption reporting requirements.
- The final GENIUS Act rule takes effect January 18, 2027, while anti-money laundering and sanctions compliance proposals remain pending.
The American Bankers Association (ABA) has criticized the Office of the Comptroller of the Currency (OCC) for dropping proposed restrictions on stablecoin rewards. The regulator’s final GENIUS Act rule leaves third-party reward programs subject to case-by-case review. ABA CEO Rob Nichols warned that addressing deposit flight after it occurs is the wrong approach.
OCC Leaves Stablecoin Rewards Under Case-by-Case Review
The OCC removed a proposal that would have presumed certain arrangements between stablecoin issuers and third parties violated the GENIUS Act. The law prohibits issuers from paying interest or yield directly to stablecoin holders, but does not explicitly ban exchanges from offering rewards.
Banking groups have urged regulators to close this gap, arguing that stablecoin rewards could draw deposits away from traditional banks and reduce lending capacity. However, the OCC will assess individual arrangements and pursue violations or attempts to evade the law.
An OCC official told reporters the agency would let the market develop and respond as issues arise. The regulator also declined to confirm whether existing exchange reward programs comply with the final rule.
Final Rule Gives Stablecoin Issuers More Reserve Flexibility
Beyond rewards, the final rule relaxes several proposed limits on reserve management. The OCC removed a proposed 20-day weighted-average maturity limit, allowing issuers greater flexibility with eligible investments, including longer-dated U.S. Treasuries.
Issuers can also withdraw surplus reserves at any time, provided they maintain sufficient backing for outstanding stablecoins. Additionally, the OCC eased some counterparty limits while retaining risk safeguards.
For redemptions, issuers must notify the OCC within 24 hours if requests exceed 10% of a stablecoin’s outstanding value during a 24-hour period. The final rule retains one-to-one reserve backing, liquidity requirements and stress-testing obligations.
OCC Sets January 2027 Effective Date
Comptroller Jonathan Gould said the rules provide standards for reserve backing, redemptions and risk management. The framework covers eligible issuers, certain bank subsidiaries, nonbank financial companies and qualifying foreign issuers under OCC jurisdiction.
The final rule takes effect January 18, 2027. However, the OCC has not announced when it will begin accepting applications from prospective stablecoin issuers. Meanwhile, anti-money laundering and sanctions compliance rules remain pending.
The OCC and Treasury Department are preparing a separate proposal. The dispute over stablecoin rewards also remains unresolved in negotiations over the CLARITY Act.