OCC regulatory proposal sets strict stablecoin yield ban under GENIUS Act

Federal banking regulators are moving to reshape digital dollar markets, with a sweeping stablecoin yield prohibition now central to Washington’s emerging framework.

OCC outlines zero-yield standard for GENIUS Act implementation

The Office of the Comptroller of the Currency (OCC) has released an extensive regulatory proposal to implement the GENIUS Act and eliminate all yield payments on payment stablecoin holdings. The document sets out detailed operational requirements for authorized issuers and launches a 60-day public comment period. Moreover, the initiative signals a fundamental shift in how payment stablecoins will operate under federal banking supervision.

Under the draft rules, authorized payment stablecoin issuers are explicitly barred from distributing any form of yield tied to stablecoin ownership or transaction activity. The framework goes further by creating a regulatory presumption that indirect or affiliate-based reward structures could violate GENIUS provisions. However, issuers are allowed to rebut this presumption with sufficient documentation.

According to the OCC, issuers carry the burden of demonstrating that any incentives provided by affiliates or connected parties are not disguised compensation for holding stablecoins. The agency warns that such schemes could function as attempts to sidestep statutory yield restrictions. Issuers must therefore provide written evidence and detailed documentation to counter these regulatory assumptions.

The proposal carves out two narrowly tailored exceptions focused on commercial relationships. Independent merchants may still offer merchant discount programs when customers pay with stablecoins, and issuers can share revenues with unaffiliated partners through whitelabel arrangements. That said, both exceptions are tightly drafted to ensure they do not create yield or compensation opportunities for stablecoin holders themselves.

Regulatory framework reshapes CLARITY Act discussions

The OCC’s blueprint directly feeds into ongoing debates around the Digital Asset Market Clarity Act of 2025, often referred to as the CLARITY Act of 2025. By locking in a zero-yield baseline for GENIUS-compliant payment stablecoins, the agency defines hard boundaries for incentive design. This move is likely to influence how lawmakers and industry groups approach clarity act negotiations over the coming months.

In practice, the framework underlines that stablecoin yield products will not fit within the GENIUS regulatory perimeter. Companies that have lobbied for regulated interest on stablecoin deposits now face a clear structural barrier. Their preferred models, which rely on paying returns to token holders within a banking-style framework, sit outside the category the OCC is building for payment stablecoins.

Moreover, the proposal formalizes a bright line between yield-generating instruments and federally supervised payment tokens. Interest-bearing offerings will need to migrate to different regulatory classifications or rely on separate licensing arrangements. This separation pushes high-yield products toward either securities, investment, or alternative prudential regimes rather than bank-style payment infrastructure.

Expanded supervision and cross-border reach

The OCC’s proposed oversight perimeter is broad. It covers national bank affiliates, federal qualified issuers, state qualified issuers, and certain foreign firms that issue or manage stablecoins. Crucially, specific international issuers fall under this regime whenever they serve American customers, extending U.S. supervisory reach across borders.

This expansion underscores the agency’s intent to control systemic risks tied to dollar-referenced tokens regardless of where operators are domiciled. However, it also raises compliance challenges for non-U.S. firms that must now navigate overlapping regulatory requirements. The emphasis on international issuer oversight signals that cross-border stablecoin activities will face more intense scrutiny from banking authorities.

The draft text reinforces federal primacy over international stablecoin operations by tying access to the U.S. market to adherence with GENIUS standards. Additionally, the OCC highlights that entities falling under this definition will be subject to examination, enforcement tools, and remedial actions comparable to those applied to domestic banking organizations.

Operational, reserve, and capital standards for payment stablecoins

Beyond yield restrictions, the proposal introduces granular operating rules for payment stablecoin issuers. These include criteria for reserve asset composition, redemption procedures, liquidity risk management, independent audits, and custody arrangements. Moreover, the OCC details application processes and minimum capital expectations designed to bolster systemic resilience.

Existing capital adequacy rules and enforcement frameworks will be updated to align with GENIUS-specific requirements. This recalibration aims to ensure that payment stablecoins remain fully redeemable and liquid during market stress. The payment stablecoin rules also seek to harmonize risk management with broader banking standards, even as they respond to the unique features of tokenized liabilities.

The agency anticipates that the new regime will be fully operational by January 2027 at the latest. Earlier activation is possible if final regulations are completed ahead of that statutory deadline. However, the OCC notes that Bank Secrecy Act obligations and sanctions compliance will be handled through separate rulemakings, which will further define the compliance perimeter for digital asset activities.

In sum, the occ regulatory proposal elevates consumer protection and prudential safeguards while shutting the door on yield-bearing payment stablecoin designs. It draws a sharp distinction between pure payments infrastructure and investment-style products, setting the stage for parallel but distinct regulatory paths as U.S. lawmakers and agencies finalize the future framework for dollar-linked digital assets.