GENIUS Act Stablecoin Rules: OCC Final Rule Due by November

What's happening

US stablecoin regulation is about to move from proposals to binding rules. Comptroller of the Currency Jonathan Gould said in August that the Office of the Comptroller of the Currency (OCC) will publish its final rule implementing the GENIUS Act by November18. He made the announcement at a blockchain symposium in Wyoming and said the agency had started drafting before the bill was even signed. Since then, the other agencies have moved quickly. On September 24, the Federal Reserve released two proposed rules: one covers reserves, capital and risk management for the stablecoin issuers it supervises, and the other sets out how state member banks can apply to run issuing subsidiaries1317. On September 30, Treasury issued an interim final rule, effective immediately, that sets the procedures states must follow to certify their own stablecoin regimes1114.

All of this comes late. Congress gave regulators until July 18, 2026, one year after the law's enactment, to finish the rules, and every agency missed that deadline57. Several agencies had published proposals by then, but none had finalized anything.

Taken together, the reporting points to one conclusion. The details of the November rule matter less than the fact that bank regulators have settled on the shape of the system. Payment stablecoins will be strictly regulated, fully reserved settlement tools that pay holders nothing, and any return on dollars will have to come through a separate product.

The yield ban is the banking story

For banks and interest-rate markets, the most important provision is the one that makes stablecoins unlike deposits. Section 4(a)(11) of the GENIUS Act bars permitted issuers from paying holders interest or yield of any kind, in cash, tokens or other consideration, solely for holding, using or keeping the coin110. Congress wanted to stop stablecoins from becoming deposit substitutes that pull money out of insured banks7. One legal analysis puts the policy goal more bluntly: preventing commercial bank deposits from fleeing during periods of stress10.

That explains why the banking lobby treated the provision as a win and why the crypto industry immediately began testing its limits7. Most of the dispute is about intermediaries. As written, the statute applies only to issuers. It does not expressly stop an exchange or affiliate from paying rewards on stablecoin balances1015.

The regulators have now closed much of that gap themselves. The OCC's proposal, which ran 376 pages and appeared in the Federal Register on March 2, presumes that yield paid to holders through affiliates or related third parties breaks the ban110. That presumption covers white-label distribution partners27. Analysts note that the definition of "related third party" is broad enough to reach exchange reward programs10. The Fed's September proposal takes the same approach. It presumes certain affiliate and third-party arrangements are prohibited, and an issuer can rebut that only in writing by showing the structure was not designed to get around the rule18. Coverage of the Fed proposal draws the line this way: rewards tied to actually using a service may be allowed, but returns that grow with the size of a holding, the way deposit interest does, are not9.

The agreement between the Fed and the OCC is the most important signal for markets. Agreement between the two main bank regulators suggests issuers will face the same yield standard whichever charter they hold5. That reduces the chance that firms shop for the most lenient regulator. It also suggests that whatever the OCC finalizes in November will serve as the template.

Why the reserve rules matter for rates

The yield ban changes who keeps the interest income. Issuers still earn the return on reserves, mostly Treasury-bill income, but they cannot pass it to holders as a feature of the coin4. As a result, managing reserves becomes the main source of revenue, and issuers will have to compete on settlement speed, cross-border reach and merchant adoption rather than on rates10. That makes stablecoin issuers sensitive to short-term rates in much the way money funds are, with one difference: their customers do not share in the gains.

The Fed's draft would require reserves of at least one-to-one, kept separate from other assets and valued at fair value at least once a day13. Qualifying assets would include short-term Treasury bills and other highly liquid instruments5. One summary of the Fed proposal reports a maturity cap of 93 days on Treasury reserves and a two-day redemption window15. Those figures come from secondary coverage rather than the primary legal analyses, so they should be checked against the final text. Fed Governor Michael Barr specifically asked for comment on whether the proposal deals adequately with interest-rate and foreign-currency risk18. He also said more work will be needed before stablecoins become reliable payment instruments5.

The regulators have also built in tools for handling runs. Under the OCC draft, if redemption requests exceed 10% of outstanding coins within 24 hours, the redemption period automatically extends to seven calendar days unless the OCC decides otherwise1. This is where the agencies differ. The FDIC would require issuers to report significant redemption requests and would decide on extensions case by case. The Fed's framework adopts neither trigger2. For a market that sells itself on par redemption, a rule that could delay redemptions by a week during stress is a significant design choice, and one worth watching in the final version.

Capital costs and bank resistance

The Fed's capital proposal would require bank-affiliated issuers to hold real buffers. One summary describes an operational-risk charge of 2% on the first $20 billion of outstanding stablecoins, 1.5% on the next $30 billion and 1% above $50 billion8. Arnold & Porter also describes a 2% charge on uninsured deposit and reverse-repo exposure, plus a requirement to deconsolidate the issuer from the parent's balance sheet. The firm says these terms would meaningfully change the economics of a bank-run stablecoin program2. An issuer that misses its capital requirement at a quarter-end would have to file a remediation plan. If it is still short at the next quarter-end, it would have to liquidate reserves and redeem its coins17.

The banking industry has pushed regulators to go slower and stricter. Reports say major banks asked for longer comment periods, which would slow implementation15. The Independent Community Bankers of America (ICBA) has asked the FDIC for a strict framework, asked the OCC to strengthen its draft, and urged regulators to coordinate so their rules do not conflict. The ICBA has also told the OCC not to finalize reporting requirements until the core framework is done. Separately, the American Bankers Association has raised concerns that state-certified regimes could let issuers go beyond the narrow activities the Act allows11.

The two-tier system and the calendar

Treasury's interim rule sets up the split between state and federal oversight. Issuers with $10 billion or less outstanding can choose state supervision if their state's regime passes a "substantially similar" test. That test is run by a committee chaired by the Treasury Secretary that includes the heads of the Fed and the FDIC1114. Larger issuers must move to federal oversight within 360 days unless they get a waiver11. That puts Circle, which already holds an OCC charter, on the federal track. Tether's status as a non-US entity means the state route does not apply to it11. Comments on the Treasury rule and on both Fed proposals are due November 301314.

Coverage of the timeline is less consistent. Under the law, the Act takes effect on the earlier of January 18, 2027, or 120 days after final rules are issued13. Legal500 points out that even a November OCC rule would not bring that date forward, because 120 days from November falls after January 18. January 18 therefore governs, and the prohibition is not yet in force10. One outlet described the November date as a cutoff for charter applications rather than a rule release. The Comptroller's own statement was about a final rule18. Reporting also differs on the CLARITY Act market-structure bill. One account says it failed, leaving the GENIUS Act as the main law on yield9. Another treats it as pending legislation that would extend the ban to service providers10.

The bottom line

The OCC rule will not change the January deadline, but it will show how strictly regulators intend to enforce the rules. The most likely outcome is a final rule close to the February draft. That would mean a presumption against yield paid through affiliates, firm reserve and capital requirements, and authority to slow redemptions during stress. The Fed has already signaled agreement on those points58. Under that outcome, banks keep the protection for deposits they lobbied for, issuers make money from rate spreads rather than by competing on rates, and yield-seeking users move toward tokenized money-market funds and other separately regulated products7.

The unresolved pieces are the gaps between agencies on how to handle runs and the questions around the state pathway, and those are the provisions to watch most closely when the final text comes out. A separate push from accounting standard-setters to treat redeemable stablecoins as cash equivalents could bring more corporate money into the market once the federal rules are settled16.