American Bankers Association accuses OCC of undermining Congress with final stablecoin rewards rule

The fight between banks and crypto platforms has reignited after a top banking regulator declined to weigh in on third-party stablecoin rewards, drawing accusations from the banking lobby that regulators are undermining Congress.

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 rule diverged from its initial proposed rule in its treatment of stablecoin rewards, which allow users to earn interest on deposited funds. Later in the day, both banks and crypto weighed in on the dispute once again.

The GENIUS Act said that issuers cannot directly pay interest on stablecoins, but there has since been debate on whether third-party platforms, such as Coinbase, can. The issue was hotly debated during negotiations for a broader crypto bill called the Clarity Act, which has so far failed to progress in the Senate.

The initial OCC rule incorporated the GENIUS approach in that it bans issuers from directly paying interest on stablecoins. The proposed rule also created a presumption that certain arrangements could be unlawful if issuers had certain types of business relationships with third parties. However, the final rule drops that presumption about third parties.

The OCC's final rule preserves the ability for crypto platforms to offer yield, despite "Congress's clear intent to protect local lending," The American Bankers Association CEO Rob Nichols said in a statement on Wednesday.

"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 said. "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."

Meanwhile, the Blockchain Association said removal 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," said BA Chief Policy Officer Lindsay Fraser in a statement. "That clarity will bring more innovation, more competition, and more dollar-backed payments onshore under strong federal oversight."

In a call with reporters on Tuesday, a regulatory official said the situation would be handled on a case-by-case basis.

Investment bank TD Cowen said it viewed the OCC's final rule as a negative for banks and said a case-by-case basis creates uncertainty.

"Until the courts rule, there will be ambiguity on what is permitted and what is prohibited, which is a negative," said TD Cowen’s Washington Research Group, led by managing director Jaret Seiberg, said in a note 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."