| Key Points: – OCC proposes implementing GENIUS Act for payment stablecoins, opens formal comment period. – Plan brings privately issued dollar tokens under prudential oversight with operational guardrails. – Draft prohibits interest-like returns; law effective by January 18, 2027 at latest. |
The agency released a proposed rule to implement the GENIUS Act for payment stablecoins, opening a formal feedback process. The notice outlines a path to bring privately issued dollar tokens under prudential oversight while clarifying operational guardrails.
The draft would prohibit payment of interest or yield by stablecoin issuers, including products that resemble deposit-like returns, as reported by Coingape. That constraint is central to separating payments functionality from investment features.
The GENIUS Act is slated to take effect on the earlier of 18 months after enactment, January 18, 2027, according to The Block. This timeline shapes how quickly new and existing programs must align with federal standards.
The proposal marks a step toward a dedicated oversight framework for stablecoin issuance and operations, as reported by Law360. Stakeholder responses specific to this notice are still emerging.
Who can issue: banks, nonbanks, and foreign issuers
The proposal details how banks, nonbanks, and foreign issuers could operate stablecoins under U.S. banking supervision, according to Decrypt. That construct aims to create a single supervisory perimeter for payment stablecoins while preserving different charter paths.
The notice also signals that the agency wants broad input on operational details and supervisory parity before finalizing rules. “OCC has issued proposal to implement GENIUS Act, seeking public feedback,” said the Office of the Comptroller of the Currency in its proposal notice.
On scope, implementing rules should adhere closely to statute and avoid sweeping in open‑source developers, validators, or software protocols absent clear mandates, according to Coinbase. The company also argues that third‑party rewards or loyalty programs should not be treated as prohibited yield unless the issuer itself is directly involved.
What this could mean for competition and consumer protection
The shape of the final rule could influence market entry, pricing models, and reserve practices across bank and nonbank issuers. Clarity on definitions and the yield ban will likely determine how consumer risks are mitigated without advantaging any single charter type.
Deposit flight concerns and yield prohibition enforcement
Legacy banking groups warn that yield or yield‑like features could accelerate deposit flight from traditional accounts, potentially affecting credit intermediation, as reported by PYMNTS. Those concerns help explain why the proposal’s ban on interest is drawing intense scrutiny.
Industry associations have urged regulators to extend the prohibition to affiliates and exchange partners that might replicate interest via rewards, as noted by The Clearing House. Effective enforcement would likely hinge on transparent definitions of “yield,” affiliate relationships, and marketing practices.
State equivalency, foreign issuers, and market trust implications
State supervisors support allowing state‑chartered issuers to operate under regimes deemed “substantially similar” to federal standards, while tightening definitions to prevent loopholes, according to the Conference of State Bank Supervisors. Clear equivalency criteria could reduce regulatory arbitrage and preserve state innovation.
If foreign issuers are supervised on comparable terms when operating in the United States, parity could bolster market trust and cross‑border payments utility. Consistent disclosures and reserve controls would remain pivotal to consumer confidence regardless of charter type.
Some policymakers argue that gaps remain around consumer protection, financial stability, AML/KYC, and national security, as noted by the Senate Banking Committee’s website. Addressing conflicts of interest and big‑tech entry risks is expected to be part of ongoing debate as comments are reviewed.
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