OCC leaves stablecoin rewards open to crypto exchanges

The Office of the Comptroller of the Currency (OCC) issued a final rule on Oct. 21 that bars stablecoin issuers from paying holders interest directly but leaves rewards paid through exchanges for case-by-case review. The distinction matters because it shapes whether crypto platforms can pass along income earned on the assets backing stablecoins. The Associated Press report on the rule said the OCC’s decision keeps that option open for exchanges such as Coinbase and Robinhood.

Here is the payment path. A customer holds a stablecoin, a digital token designed to keep a steady value, typically $1. The issuer backs the tokens with assets such as bank deposits and U.S. Treasury securities. Those assets can earn interest. The issuer cannot pay that interest to a holder solely for holding, using or retaining the stablecoin. An exchange that holds or trades the token may, depending on the arrangement, share earnings with its customer as a reward.

Why can an exchange pay what an issuer cannot?

The GENIUS Act draws the line at the issuer’s payment to the token holder. The OCC’s rule says an intermediary payment might be made solely because a person holds a stablecoin, or it might be made at least partly for other reasons. The agency will assess those arrangements on their facts and circumstances, rather than treating every exchange reward as automatically prohibited. The OCC’s final rule takes effect Jan. 18, 2027.

Think of the issuer as the maker of a prepaid balance and the exchange as the shop where a customer keeps and uses it. The law restricts the maker from paying a return just for holding the balance. The exchange’s separate payment depends on how its program works. That analogy has limits: the OCC’s rule does not make every exchange reward lawful. The agency says it will evaluate each arrangement individually.

What changes for stablecoin users and banks?

For users, the rule leaves crypto platforms room to offer rewards, but it does not guarantee that a particular program will pass OCC review. The reward also is not the same as interest from a bank deposit. The AP reported that stablecoins do not carry an equivalent to Federal Deposit Insurance Corp. deposit insurance.

Banks have argued that higher crypto rewards could draw customer money away from deposits, reducing funds available for lending. The OCC’s final rule did not adopt the broader restriction banks sought. Instead, it preserves the direct-payment ban on issuers while leaving intermediary rewards to case-by-case scrutiny. The practical test will be how platforms structure each program and how the OCC applies the rule once it takes effect.

Source material

• Associated Press report on the rule — apnews.com
• OCC’s final rule — occ.gov