Stablecoin yield restrictions proposed by OCC in GENIUS Act implementation, paving path for CLARITY legislation
Through its GENIUS Act implementation proposal, the OCC aims to prohibit payment stablecoins from offering yield while establishing a rebuttable presumption against reward structures involving issuers and their affiliates.
A comprehensive 376‑page proposal has been released by the US Office of the Comptroller of the Currency (OCC) aimed at putting the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act into practice, with particular focus on addressing the contentious issue surrounding stablecoin yield payments.
The proposed framework will accept public feedback for a 60‑day period starting from its Wednesday release, and outlines comprehensive regulations governing payment stablecoin issuers that fall under OCC oversight and supervision.
Under the proposed regulations, supervised entities would face complete prohibition from distributing interest or yield in any format, including cash payments, token distributions, or other forms of compensation, "solely in connection with the holding, use, or retention" of a payment stablecoin, in alignment with the GENIUS Act's section 4(a)(11).
Thania Charmani, partner at global law firm Winston & Strawn, commented on X that the OCC proposed to "resolve the debate on stablecoin yield through rulemaking," potentially clearing the way for the Digital Asset Market Clarity Act of 2025 (CLARITY) to "proceed without that provision."
How the OCC proposal implements GENIUS on yield
GENIUS, enacted in July 2025, created a federal framework for payment stablecoins and restricted issuance in the US to licensed permitted issuers such as bank subsidiaries, new federal stablecoin issuers, and certain large state‑regulated firms.
The draft regulation from the OCC converts the legislative framework into practical operating restrictions, which include stringent limitations on how stablecoin issuers regulated under GENIUS can design the economic incentives surrounding their digital currencies.
Going beyond the basic requirements, the proposal establishes a rebuttable presumption that issuers are in violation of the yield prohibition when they maintain agreements to compensate an affiliate or "related third party" with yield, and that entity subsequently distributes yield to individuals holding the issuer's payment stablecoin.
While issuers retain the ability to challenge the presumption through written submissions to the OCC, the regulatory body emphasizes the "close nexus" linking issuer compensation and ultimate holder yield, characterizing such arrangements as "highly likely" efforts to circumvent the statutory prohibition.
Two specific exemptions are explicitly outlined in the proposal. The framework "is not intended to prevent" merchants from autonomously providing discounts for transactions utilizing payment stablecoins, and it permits issuers to distribute profits generated from the stablecoin with non‑affiliate partners within whitelabel partnership arrangements.
What the proposal means for CLARITY and Coinbase
Should the OCC's proposed regulation be adopted in its current form, it would carry significant ramifications for the ongoing CLARITY Act discussions concerning stablecoin reward programs.
CLARITY drafts have focused on whether digital asset service providers should be allowed to pay yield or rewards on payment stablecoin balances, a point of contention that has already caused friction between industry stakeholders, such as Coinbase.
Through leveraging GENIUS implementation to ban yield at the issuer level, the banking regulatory component of the framework effectively sets a yield‑free standard for payment stablecoins that comply with GENIUS requirements.
For Coinbase and similar firms that have argued they should be able to offer yield on stablecoin balances while operating within a fully regulated US framework, the message is clear:
Stablecoin yield and GENIUS‑compliant, OCC‑supervised payment stablecoins are being put on opposite sides of a regulatory line.