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- The American Bankers Association criticized the OCC final stablecoin rule on October 21.
- The association warned that indirect rewards could draw deposits away from traditional banks.
- The final regulatory framework for stablecoin issuers takes effect January 18, 2027.
The American Bankers Association (ABA) criticized the Office of the Comptroller of the Currency’s (OCC) final stablecoin rule on Oct. 21, warning that indirect rewards could draw deposits away from banks. The dispute centers on the OCC’s removal of a provision requiring issuers to justify certain payments through affiliates and distribution partners.
ABA Says Indirect Rewards Threaten Bank Lending
The ABA said the OCC had abandoned proposed safeguards covering affiliates, exchanges, and distribution partners. It argued that issuers could offer payments economically equivalent to yield while technically avoiding the statutory prohibition.
The association said those arrangements risk blurring the distinction between payment stablecoins and bank deposits. It warned that deposit migration could reduce funds available for lending and rejected waiting for supervisory experience before addressing that risk. The ABA welcomed other elements of the framework and said it would continue working with regulators and policymakers.
OCC Drops Presumption but Retains Yield Prohibition
The final rule implements the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. It prohibits covered issuers from paying interest or yield solely for holding, using or retaining a payment stablecoin.
The earlier proposal would have presumed that certain arrangements involving affiliates and related third parties violated that restriction unless an issuer demonstrated otherwise. The OCC removed that presumption after receiving conflicting comments about how broadly it could capture commercial payments.
The OCC said an issuer cannot evade the ban by paying another entity to distribute prohibited interest or yield on its behalf. Other intermediary payments require assessment of their purpose and structure. Payments genuinely made for other purposes fall outside the statutory ban, but assigning a nominal alternative purpose does not shield an arrangement designed to evade it.
OCC Sets January Start for Stablecoin Framework
The final rule takes effect Jan. 18, 2027. It establishes requirements for issuers under OCC jurisdiction and certain custody activities, including standards governing reserves, redemption, and risk management.
The OCC said it would monitor the developing industry and adjust its framework where necessary. It will separately announce when it begins accepting issuer applications and waiver requests, while anti-money-laundering and sanctions requirements will be addressed through another rulemaking.
