OCC rule leaves stablecoin rewards open to crypto exchanges

Crypto exchanges can keep offering customers interest-like rewards on stablecoins under a new rule from the Office of the Comptroller of the Currency (OCC), according to the Associated Press’s report on the October 21 announcement. The decision leaves open a source of competition for bank deposits and a central point of dispute between banks and crypto companies.

The rule implements the GENIUS Act, the federal law that sets rules for payment stablecoins. The OCC says its final rule takes effect on January 18, 2027. It covers stablecoin issuers under OCC authority and some related activities.

Who can pay rewards under the new rule?

Stablecoin issuers such as Circle remain barred from paying interest directly to people who hold their coins, AP reported. But exchanges such as Coinbase and Robinhood can pass some of the earnings from stablecoin backing to customers as rewards, on a case-by-case basis.

Stablecoins are cryptocurrencies designed to hold a steady value, often around $1. They are backed by assets such as bank deposits and U.S. Treasury securities, which can earn interest. Crypto firms want to share some of those earnings with customers who hold stablecoins.

The OCC’s final rule notice sets requirements for issuers, including rules on reserves, redemptions, risk management and oversight. It does not itself describe exchange rewards in detail; AP reported that the rule leaves that practice available on a case-by-case basis.

Why are banks concerned about stablecoin rewards?

Banks say attractive crypto rewards could draw money out of bank accounts and leave banks with fewer deposits to lend. The American Bankers Association said the OCC’s decision threatens funds banks use to make loans, AP reported. The banking industry has warned that the shift could drain trillions of dollars from the banking system.

AP reported that Coinbase offered rewards of up to 3.5% on USDC balances, compared with a 0.38% average yield for traditional savings accounts, citing the latest Federal Deposit Insurance Corporation figures. Those rates help explain why banks see stablecoin rewards as a potential rival for customer savings.

Consumer groups have also raised concerns that customers could mistake crypto rewards for bank interest. Stablecoin holdings do not have the same federal deposit insurance that protects eligible bank deposits. The OCC rule does not end the dispute over how far those rewards should be allowed to go.

Sources

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