The American Bankers Association is pushing back against the Office of the Comptroller of the Currency after the banking regulator dropped proposed curbs on stablecoin rewards in its final GENIUS Act rule, leaving third-party reward programs to be examined case by case. ABA CEO Rob Nichols warned that waiting to address deposit flight until after it happens is the wrong approach.

OCC Leaves Stablecoin Rewards Under Case-by-Case Review

The OCC scrapped a proposal that would have presumed that certain arrangements between stablecoin issuers and third parties breached the GENIUS Act, the federal statute that established the regulatory framework for payment stablecoins. While the statute bars issuers from paying interest or yield directly to stablecoin holders, it stops short of explicitly prohibiting exchanges from offering rewards of their own.

Banking groups had pressed regulators to close that gap, warning that rewards on stablecoins could siphon deposits away from traditional banks and shrink their lending capacity. Deposits fund the bulk of bank lending, which is why the industry treats an outflow of customer balances into yield-bearing alternatives as a structural concern rather than a marketing dispute. The OCC instead plans to evaluate individual arrangements on their merits and to pursue violations as well as attempts to circumvent the law. An OCC official told reporters the agency intends to let the market develop and respond as issues emerge, and the regulator would not say whether exchange reward programs already in operation comply with the final rule. That means clarity for market participants arrives case by case, rather than through an upfront list of permitted structures.

Final Rule Gives Stablecoin Issuers More Reserve Flexibility

The rewards question was not the only point where the final rule diverged from the earlier draft. The OCC stripped out a proposed 20-day weighted-average maturity limit on reserves, handing issuers wider latitude over eligible investments, among them longer-dated U.S. Treasuries. Maturity caps of that kind are a standard tool for restraining a portfolio's interest-rate sensitivity, so their removal gives reserve managers more room to hold longer-duration assets. Issuers may also pull out surplus reserves at any time, so long as outstanding stablecoins remain sufficiently backed, and the agency loosened some counterparty limits while keeping risk safeguards intact.

Redemption reporting was left intact: issuers must still alert the OCC within 24 hours if redemption requests top 10% of a stablecoin's outstanding value in any 24-hour period, an early-warning signal for elevated redemption activity. The rule also preserves the requirements for one-to-one reserve backing, liquidity and stress testing.

OCC Sets January 2027 Effective Date

Comptroller Jonathan Gould said the rules set standards for reserve backing, redemptions and risk management. The framework applies to eligible issuers, certain bank subsidiaries, nonbank financial companies and qualifying foreign issuers that fall under OCC jurisdiction.

The rule takes effect on January 18, 2027, though the OCC has yet to say when it will start accepting applications from prospective stablecoin issuers. Separate rules on anti-money laundering and sanctions compliance are still in the works, with the OCC and the Treasury Department preparing a standalone proposal. Until both pieces are in place, the operational roadmap for would-be issuers remains incomplete.

The fight over stablecoin rewards, meanwhile, remains live in negotiations over the CLARITY Act.