GENIUS Act rules finalized by OCC ahead of January deadline

The GENIUS Act, signed in 2025, created the first federal framework for payment stablecoins, replacing a patchwork of state money-transmitter licenses that issuers like Circle and Paxos had operated under for years. The OCC, which charters national banks, was tasked with writing the rules for federally supervised issuers. Its October 21 final rule follows a proposal period that drew pushback from both banking trade groups and stablecoin issuers over reserve and rewards provisions.

Issuers under OCC jurisdiction must still back tokens at least 1:1 and cannot pay yield directly to holders, but they keep room to strike third-party rewards deals, a point the earlier draft had threatened to restrict. None of this takes effect immediately: the agency has not opened its application window, so prospective issuers wait while existing ones can keep minting under new waiver guidance while a decision is pending.

Banking groups' objections point to a real trade-off: stablecoin rewards that look enough like yield can still pull deposits out of banks and squeeze lending, even with the direct yield ban intact. Regulators are trying to keep stablecoins payment instruments rather than savings products, but a loophole for rewards arrangements blurs that line. The result is a rule that satisfies neither side fully, banks fear leakage, issuers face a cash-equivalent they can't pay interest on but can still make attractive. (per cryptopolitan.com)

The application window's opening date is the next concrete marker, since it determines when new issuers can actually seek OCC approval rather than operate on waivers. The agency is also collecting public comment on new reporting forms under the Paperwork Reduction Act, a step that will shape compliance burden before the January 18, 2027 effective date. AML and sanctions requirements remain unfinished and will need separate rulemaking before the framework is complete.