OCC Proposes New Framework for Stablecoin Regulation

By: Isha Das

The United States Office of the Comptroller of the Currency (OCC) has unveiled an extensive proposal through the GENIUS Act, aiming to establish regulatory clarity for stablecoins. This move seeks to resolve ongoing debates about stablecoin yields and outline a comprehensive operational framework for permitted entities. Spanning 376 pages, the proposal sets out to restrict any form of interest or yield payments associated with the holding or use of payment stablecoins.

According to the GENIUS Act, supervised entities, which include payment stablecoin issuers under the OCC's jurisdiction, will be prohibited from offering yields in any form—be it cash, tokens, or other incentives—linked solely to the holding or utilization of stablecoins. This regulatory stringency aligns with section 4(a)(11) of the GENIUS Act, aiming to clearly delineate the roles and obligations of entities involved in the stablecoin ecosystem.

The detailed framework not only specifies restrictions but also addresses how banks, nonbanks, and foreign issuers can integrate stablecoins into their operations under U.S. banking supervision. This regulation reflects a cautious approach to stablecoin management, potentially impacting the rewards structures of issuer-affiliate programs significantly. The comprehensive strategy could redefine the stablecoin landscape, ensuring robust compliance and stability within the financial ecosystem.

As the proposal is open to public commentary for a 60-day period, it invites feedback and discussions from the industry, likely paving the way for significant discourse and potential adjustments before finalization. The implementation of these regulations under the GENIUS Act could substantially shape the future of U.S. stablecoin regulation, offering a clearer direction for financial institutions operating within this domain.