- The Office of the Comptroller of the Currency (OCC) proposed rules this week that would restrict certain stablecoin rewards programs under the GENIUS Act.
- The proposed restrictions could impact Coinbase‘s popular arrangement with Circle, which offers users roughly 4% yield on their USDC deposits.
- Coinbase reported $1.3 billion in stablecoin revenue last year, citing its USDC rewards program as a key growth driver according to a shareholder letter.
- The industry is split, with experts noting the rules are not final and can be changed or challenged during a 60-day public comment period.
The Office of the Comptroller of the Currency released a 376-page proposed rulemaking this week, detailing its initial guidelines for implementing the stablecoin-focused GENIUS Act. These preliminary rules include prohibitions on specific stablecoin yield arrangements between issuers and third parties.
For instance, the language seems to describe programs like the one between Circle and Coinbase. Consequently, crypto policy leaders told Decrypt the proposal could impact Coinbase‘s current USDC rewards program, which offers users about 4% yield.
However, experts emphasized the complexity of the rule and the potential for it to be worked around. One policy leader said Coinbase was likely always going to need to adjust its program after the GENIUS Act’s implementation.
Finance lawyer Scott Johnsson said the language “most likely does” impact the program. Meanwhile, he expects the rule will be challenged and changed during the public comment process.
Conversely, Circle‘s leadership praised the OCC’s move. The company’s head of global policy commended the regulations, a sentiment echoed by CEO Jeremy Allaire, who called it part of “accelerating U.S. leadership.”
A banking industry source, however, told Decrypt the proposal does not give them much comfort. Traditional banks have been lobbying to restrict stablecoin rewards they fear could draw customers away from low-yield accounts.
“It really doesn’t solve the problem,” the source said, pointing to potential loopholes. They emphasized that rulemakings “can always be changed,” and the banking lobby would prefer permanent legislative restrictions.
Law professor Todd Phillips noted, “This doesn’t fix the debate.” Consequently, he stated the proposed rules are “not going to satisfy the two warring sides” in the ongoing crypto policy negotiations.
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