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OCC Finalizes GENIUS Act Rule as Stablecoin Rewards Face Review
Existing rewards programs will get no automatic protection under the new framework
TL;DR
- The OCC finalized its GENIUS Act framework for payment stablecoin issuers before the law takes effect on January 18, 2027.
- The rule sets standards for reserves, redemption, risk management, custody, capital, applications and issuer supervision.
- Existing stablecoin rewards programs will be reviewed case by case rather than treated as automatically compliant.
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The Office of the Comptroller of the Currency finalized its GENIUS Act rule, establishing requirements for payment stablecoin issuers under its supervision while making clear that existing rewards programs will not automatically qualify under the law.
The framework applies to subsidiaries of national banks and federal savings associations, federally approved nonbank issuers, some state-qualified issuers, foreign issuers and certain custody activities at OCC-supervised firms. The OCC said separately that it will announce when it begins accepting applications and waiver requests.
Most requirements are housed in a new section of OCC regulations covering reserve assets, redemption, risk management, audits and reporting, custody, applications, foreign issuer supervision and a capital and operational backstop.
The framework also addresses transitions for state-qualified issuers and circumstances in which the OCC can revoke approval. Bank Secrecy Act, anti-money laundering and sanctions requirements are excluded from this rule and are being handled separately with the Treasury Department.
Comptroller of the Currency Jonathan Gould said:
“We are providing a clear, practical framework for payment stablecoin innovation, with strong standards for reserve backing, redemption, and risk management.”
Treasury Secretary Scott Bessent also said:
“The OCC’s final rule carries that landmark legislation forward, providing a clear, practical foundation for private-sector innovation, competition, and American leadership in digital assets.”
The OCC changed its reserve requirements from the proposed version, adopting what it called “a principles-based approach with respect to reserve asset diversification and concentration requirements.”
The regulator said that approach is supported by requirements to “ensure a minimum amount of daily liquidity and avoid excessive concentration with respect to a single counterparty.” OCC officials also said the framework would create “opportunities for a range of institutions,” including community banks, to participate in stablecoin activity.
Stablecoin rewards face case-by-case OCC review
The rewards provision does not provide a blanket exemption for programs already offered by exchanges and other firms. The GENIUS Act prohibits payments made “solely in connection with the holding, use, or retention of such payment stablecoin.”
The OCC said it “will apply the language of the statute to the facts and circumstances of any particular arrangement,” while indicating that a reward that “might be made, at least in part, for other reasons” would fall outside that prohibition.
Existing programs therefore receive no automatic safe harbor.
“The OCC declines to presume that rewards programs that predated the GENIUS Act comply with the GENIUS Act,” the final rule states. “The fact that Congress may have had notice of these rewards programs does not necessarily imply that Congress endorsed them as permissible.”
The final version also removed what the proposed rule had called “rebuttable presumptions” for specified activities assumed to violate the restrictions.
The issue affects established rewards products already offered through secondary platforms. Current examples in the provided material include:
The rewards dispute has also intersected with efforts to amend the framework through the Digital Asset Market Clarity Act. The OCC said commenters had urged it to consider potential changes from that legislation, but the regulator rejected treating possible future amendments as current law.
“Unless and until such legislation passes, the OCC must implement the GENIUS Act’s yield prohibition, as enacted,” it said.
Other regulators are still completing GENIUS Act rules
The GENIUS Act was signed into law in July 2025 and restricts U.S. payment stablecoin issuance to permitted issuers while limiting digital asset service providers from offering or selling stablecoins to Americans unless the assets come from permitted issuers or qualifying foreign issuers.
Treasury Secretary Scott Bessent compared the legislation with Abraham Lincoln’s National Currency Act of 1863, which he said “established a national framework for bank-issued currency.”
The OCC proposed its implementing framework in February with a 60-day comment period. Treasury’s Financial Crimes Enforcement Network and Office of Foreign Assets Control separately proposed anti-money laundering and sanctions requirements in April, including compliance programs, suspicious activity reporting and sanctions controls. Regulators subsequently missed the law’s earlier July deadline for completing the rules.
Gould said in August that the OCC was “very intent on moving quickly and getting a final rule out by November so that we will be able to start processing applications within the new year.” The final rule is now complete, but the OCC said the actual start of application and waiver-request intake will be announced separately.
Other agencies still have GENIUS Act work underway. The Federal Deposit Insurance Corp. issued application standards before proposing its approach for state-chartered institutions in April. Treasury proposed its broader implementation in August after the earlier FinCEN and OFAC action, while the Federal Reserve subsequently proposed procedures, capital standards and reserve requirements for stablecoin-issuing subsidiaries of member banks.
The OCC received hundreds of comments from crypto companies, community bankers, trade groups, academics and others. Citing “the nascency of the industry,” the regulator said it would monitor the sector’s development and adjust its framework where necessary. The broader implementation process is continuing while other federal agencies complete their respective rules.
This article has been refined and enhanced by ChatGPT.
