The American Bankers Association (ABA) has formally objected to a final rule from the Office of the Comptroller of the Currency (OCC), the regulator of national banks, governing stablecoin rewards, arguing that the removal of a key enforcement safeguard will allow token issuers to deliver yield-like returns to customers while technically staying outside the legal prohibition.

The banking group set out its objections in an October 21 statement, issued the same day the OCC published its final rule.

What the OCC Kept and What It Dropped

The GENIUS Act, signed into law in July 2025, established the first federal rules for payment stablecoins. It bars issuers from paying interest or yield solely for holding, using or retaining a token. The OCC's final rule applies that prohibition to permitted payment stablecoin issuers and foreign issuers under its jurisdiction, while issuers licensed through other federal or state routes remain answerable to their own regulators.

A February proposal had gone further by adding a rebuttable presumption: certain arrangements with affiliates and related third parties would count as breaches unless the issuer proved otherwise. The OCC removed that presumption in the final version, saying that "because payment stablecoins are a nascent market," such a presumption was not appropriate at this stage.

Instead, the agency plans to review arrangements through licence applications and ongoing supervision, and it retains its authority to act against evasion. Two limits remain in place: an issuer cannot pay an agent to distribute yield it is barred from paying itself, and programmes launched before the Act receive no presumption that they comply.

Three Questions Decide Whose Reward It Is

With no presumption to lean on, supervisors must examine the money behind each rewards programme. Three facts carry most of the weight: who bears the cost of the reward, whether the issuer has any say over the payment, and what the holder must do to qualify. Two programmes advertising the same rate can rest on very different contracts.

Revenue sharing of this kind already exists. In correspondence with the SEC, Coinbase described its 2023 agreement with Circle, under which the exchange earns a portion of USDC reserve income—the earnings on the reserves backing the token—tied to the amount of USDC held on its platform. Coinbase has also offered USDC rewards to eligible customers.

Run through the three questions, the filing answers only part of the first: Coinbase's income from the deal rises with balances held on the exchange. It leaves open whether rewards are paid out of that income, whether Circle has any say over them and what customers must do to earn them. Those are precisely the facts supervisors would need to establish, and the final rule names no company.

For holders, a platform reward remains a promise under that platform's customer agreement, separate from the issuer's obligation to redeem the token at par.

Banks Object to Fixing Harm After the Fact

ABA president and chief executive Rob Nichols said the rule contains positive steps but departs from the OCC's original position on yield. Without the dropped safeguards, he argued, issuers can deliver returns economically equivalent to yield while technically remaining outside the prohibition. The statement gave no figures on potential deposit outflows. Its case is about timing: Nichols said that "attempting to address deposit flight and economic harm after it has occurred" is the wrong approach.

The Case for the Change

Industry groups welcomed the removal. The Blockchain Association said it "brings the final rule more closely in line with the statutory text," according to The Block. The Act's prohibition written for issuers, and the group backed a rule that stays within that wording. Chief policy officer Lindsay Fraser said the OCC had given issuers workable standards for reserves, redemption and risk management.

The Deposit Fight Is About Which Banks Keep the Money

The banks' argument is behavioural. A customer who buys stablecoins to pay a supplier usually spends them quickly. A recurring reward gives that customer a reason to keep a balance in the token rather than in a bank account.

A White House estimate published in April puts numbers on the question. In its report, the Council of Economic Advisers argued that reserves backing stablecoins largely return to the banking system, so a deposit lost by one bank reappears at another. On that basis it estimated that banning yield would raise total bank lending by $2.1 billion, or 0.02%, including about $500 million at community banks. Under assumptions the CEA itself called implausible, community bank lending rose by $129 billion, or 6.7%.

The Independent Community Bankers of America disputes the model, saying it rests on faulty assumptions and noting that community banks hold $4.9 trillion in deposits funding $4.1 trillion in loans. Its objection is about where the recycled money lands: the group argues that reserve deposits concentrate at large institutions rather than returning to the local lender that lost the customer. The ICBA made a similar case in an earlier push at the SEC; the ABA is now pressing the point at the OCC.

What to Watch After January 18, 2027

The rule takes effect alongside the GENIUS Act on January 18, 2027. The OCC will announce separately when it begins accepting issuer applications, and its first decisions are where the case-by-case review becomes visible.

Support for the banks' case would be published approvals that set no limits on partner rewards funded through reserve-income sharing. Evidence against it would be approval conditions or OCC guidance treating reserve-income pass-throughs as issuer yield.

Other regulators also matter: whether the FDIC and other GENIUS Act regulators match the OCC's approach or adopt a stricter test. As for Congress, the OCC says it must apply the ban as enacted, so broader limits on platform rewards would require new legislation.

This article is provided for informational purposes only and does not constitute legal, financial or investment advice.