The US Office of the Comptroller of the Currency published a 376-page proposed rulemaking to implement the GENIUS Act, and the most contested section targets stablecoin yield - potentially threatening the revenue-sharing arrangement that lets Coinbase pay users approximately 3.5% APY for holding Circle's USDC.
Industry lawyers are split on how broadly the language reaches, and the banking sector says it doesn't go far enough.
The GENIUS Act, signed into law in July 2025, prohibits stablecoin issuers from paying yield directly to holders.
The OCC proposal extends that prohibition to third-party arrangements, creating a "rebuttable presumption" that any contractual relationship structured to pass yield to stablecoin holders constitutes a violation - unless the parties can demonstrate otherwise in writing.
What the Proposal Would Restrict
The OCC's proposed language covers both affiliate relationships and "white-label" arrangements like the one between PayPal and Paxos, PYUSD's issuer.
A key trigger is ownership stake: if an issuer holds 25% or more in a third party, that relationship falls within the prohibition.
Entities with smaller stakes may still have a path to offering yield-adjacent programs - though the exact threshold language remains contested.
VanEck's head of digital assets research, Matthew Sigal, said on X that companies like Coinbase would need to reframe their arrangements to look more like loyalty programs than interest payments.
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Why Neither Side Is Satisfied
The proposal has drawn criticism from both directions. Finance lawyer Scott Johnsson told Decrypt the language "most likely does" affect Coinbase's USDC rewards program, though he expects it will be challenged. Circle CEO Jeremy Allaire publicly commended the OCC's proposal.
Meanwhile, a banking industry source told Decrypt the rulemaking "doesn't solve the problem" - the banking sector wants yield restrictions written into statute rather than left to regulators who can reverse course.
Todd Phillips, a law professor at Georgia State University focused on bank regulation, said the OCC's proposal "is not going to satisfy the two warring sides."
The conflict feeds directly into the stalled Clarity Act negotiations on broader cryptocurrency market structure. Some insiders say the OCC rulemaking could allow Congress to skip the yield question in that bill entirely; others say that outcome is implausible.
A deal between banking and crypto industry representatives - which White House-led talks had targeted for this weekend - has not materialized. The OCC's 60-day public comment window is now open, and the GENIUS Act's full implementation deadline is January 2027.