On Wednesday, the Treasury Department’s Office of the Comptroller of the Currency issued its final regulation putting into effect the GENIUS stablecoin legislation that was enacted last year.
Hostilities between traditional financial institutions and digital asset firms have flared up anew after a leading bank regulator chose not to take a definitive stance regarding third-party stablecoin rewards, provoking claims from the banking sector that oversight authorities are subverting the legislature.
On Wednesday, the Treasury Department’s Office of the Comptroller of the Currency published its final rule, implementing the GENIUS stablecoin act passed into law last year. The final text departed from its preliminary draft regarding how it handles stablecoin rewards, which permit holders to accrue returns on their balances. Later that same day, both the banking industry and the crypto sector weighed in on the ongoing conflict once again.
The GENIUS Act established that creators of stablecoins are prohibited from directly distributing interest on these assets, yet ongoing discussions persist regarding whether external entities, such as Coinbase, are allowed to do so. This subject was intensely contested during discussions surrounding a more comprehensive digital asset package known as the Clarity Act, which has thus far failed to advance through the Senate.
The preliminary OCC regulation adopted the framework of the GENIUS Act by prohibiting issuers from directly distributing interest on stablecoin holdings. Furthermore, the draft regulation established an assumption that specific arrangements might be deemed illegal if issuers maintained particular commercial partnerships with outside entities. Nevertheless, the newly released final rule eliminates this particular assumption concerning third parties.
The OCC’s concluding directive maintains the capacity for digital asset venues to provide yield, in spite of “Congress’s clear intent to protect local lending,” according to a public statement released on Wednesday by American Bankers Association CEO Rob Nichols.
“Those gaps risk undermining the distinction Congress drew between payment stablecoins and traditional bank deposits, threatening the funds banks use to make the loans that drive the U.S. economy,” Nichols stated. “And while we appreciate the OCC’s recognition that additional supervisory experience may inform future action in this area, attempting to address deposit flight and economic harm after it has occurred is the wrong approach.”
Conversely, the Blockchain Association noted that the elimination of that presumption “brings the final rule more closely in line with the statutory text.”
“The OCC has taken the framework Congress built and given issuers clear, workable standards for reserves, redemption, and risk management,” expressed Blockchain Association Chief Policy Officer Lindsay Fraser in a public statement. “That clarity will bring more innovation, more competition, and more dollar-backed payments onshore under strong federal oversight.”
During a media briefing held on Tuesday, a regulatory representative indicated that the matter will be addressed on an individual, case-by-case basis.
Investment firm TD Cowen stated that it interpreted the OCC’s final regulation as an unfavorable development for banking institutions, adding that a case-by-case strategy introduces unpredictability.
“Until the courts rule, there will be ambiguity on what is permitted and what is prohibited, which is a negative,” noted the Washington Research Group at TD Cowen, headed by managing director Jaret Seiberg, in a publication issued on Wednesday. “There is also the risk that whoever wins the White House in 2028 will pick a new Comptroller who will take a different view on what constitutes evasion.”
Originally published at https://www.theblock.co/news/regulation/2026-10-21-american-bankers-association-accuses-occ-undermining-congress-stablecoin-rewards-rule-421629.
