OCC Seeks to Eliminate All Stablecoin Yield with Proposed Prohibition
The Office of the Comptroller of the Currency (OCC) further allied itself with the banking lobby in a recently released 376-page GENIUS Act rulemaking proposal, which details how the regulator will prohibit interest or yield payments on regulated stablecoins.
What's the Scoop?
- Blanket Ban: The OCC's newly proposed rulemaking would presume stablecoin issuer are "paying interest" if the issuer has any type of contract, agreement, or arrangement to make payments in connection to the holding, usage, or retention of its payment stablecoin. The language is deliberately broad, aimed at capturing structures like Coinbase’s USDC yield program (funded by Circle).
- Existing Prohibition: Section 4(a)(11) of the GENIUS Act as enacted clearly bans interest on stablecoin interest. "No permitted payment stablecoin issuer or foreign payment stablecoin issuer shall pay the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin."
What's the Take?
As cash-equivalent mediums of payment, stablecoins don't technically need yield/interest to succeed as fungible money.
However, this feature is what makes them competitive (if not outright superior) to bank deposits and money market funds. By moving to close the yield loophole leveraged by Coinbase and Circle to drive USDC distribution, the OCC acts to effectively disenfranchise crypto-native stablecoin solutions.
OCC Stablecoin Guidance - TETHER and Non-US Issuers. There is also a monumental impact for non-US "Foreign Payment Stablecoin Issuer (FPSI)".
— Tom Noyes (@noyesclt) February 26, 2026
1) any non-US entity wishing to have their stablecoin offered to US citizens must register with the OCC as a Foreign Payment Stablecoin…