ABA Says OCC “GENIUS” Rules Undermine US Congressional Oversight

The American Bankers Association (ABA) has criticized the U.S. Office of the Comptroller of the Currency’s (OCC) finalized rules for the GENIUS Act, arguing that the regulator’s approach to payment stablecoin yield diverges from what Congress intended. In a notice issued Wednesday, the industry group said the OCC’s final framework contains “several positive steps,” but falls short on safeguards meant to address how stablecoin issuers could structure economically similar returns while attempting to avoid the law’s yield-payment restriction.

The ABA’s response centers on a specific change from the OCC’s earlier proposal. According to ABA, the OCC removed a provision that would have created a presumption that certain third-party arrangements violate the GENIUS ban on yield payments. The banking group warns that this decision leaves room for “economically equivalent” yield to be delivered through indirect structures.

Key takeaways

• The ABA says the OCC’s final GENIUS rules weaken safeguards tied to the statutory prohibition on yield for payment stablecoins.
• ABA argues the OCC removed a proposed presumption covering indirect third-party arrangements, creating potential ambiguity.
• The banking group warns that gaps could blur the line Congress drew between payment stablecoins and bank deposits.
• Other industry groups offered differing views, with the Blockchain Association approving the yield-related change.
• OCC’s rules are set to take effect in January 2027 as GENIUS implementation approaches, with additional guidance expected from other agencies.

ABA targets the OCC’s yield-related drafting

ABA’s critique focuses on how the final OCC rule treats stablecoin yield. The group says the regulator eliminated proposed safeguards designed to address indirect arrangements involving entities such as affiliates, exchanges, and distribution partners. In ABA’s framing, stablecoin issuers could still provide returns that are economically comparable to yield while attempting to remain “technically” within the statutory limit.

“The final rule removes the OCC’s originally proposed safeguards that would have addressed indirect arrangements involving affiliates, exchanges and other distribution partners,” ABA said. “As a result, payment stablecoin issuers can provide economically equivalent yield while technically avoiding the statutory prohibition. The OCC also declined to adopt a broader presumption against arrangements designed to circumvent the ban.”

ABA further argues that the OCC’s approach risks eroding distinctions that Congress established when it separated payment stablecoins from traditional bank deposits. The association warned that such distinctions are important because banks rely on deposit funding to make loans that support broader economic activity.

“Those gaps risk undermining the distinction Congress drew between payment stablecoins and traditional bank deposits, threatening the funds banks use to make the loans that drive the US economy.”

What changed from the earlier proposal

The ABA’s complaint implicitly points to a drafting tension that has mattered throughout the GENIUS process: how to ensure the yield prohibition is enforceable without creating overly rigid or easily circumvented definitions. The OCC’s final rule, according to coverage noted earlier by Cointelegraph, removed a provision that would have established a presumption that certain third-party structures violate the statutory ban on yield payments.

That shift matters because it affects how regulators, courts, and market participants interpret the boundaries of compliant and noncompliant compensation structures around payment stablecoins. When the rule removes a presumption, ABA argues, it may replace clearer guidance with uncertainty—an environment where different interpretations could proliferate and enforcement becomes harder to anticipate.

Bank Policy Institute sides with the banking critique

ABA was not alone among banking advocacy groups. The Bank Policy Institute also largely aligned with ABA’s concerns, saying the omission of the yield presumption swaps “clarity with ambiguity” and could heighten the risk of “deposit flight.” In other words, the fear is not only about compliance but about competitive dynamics: if payment stablecoins can effectively replicate deposit-like economics while occupying a different legal category, bank funding could face pressure.

For investors and market participants, this dispute has practical implications. Ambiguity around yield-related rules can influence how issuers design product economics, how partners structure distribution deals, and how exchanges or wallets present financial incentives to users—especially in the run-up to GENIUS implementation.

Not everyone agrees: Blockchain Association praises the revision

While banking groups criticized the final rule’s yield-related changes, the Blockchain Association took the opposite stance. It approved of the alteration, saying the OCC “brought the final rule more closely in line with the statutory text.”

This contrast highlights a core asymmetry in the debate: banking advocates view the removed presumption as an enforcement gap that could permit workarounds, while crypto industry groups frame the change as a necessary narrowing to match the statute’s language.

Both perspectives point to the same uncertainty—how strict the final boundaries will be in practice. The disagreement is likely to influence how other stakeholders engage with upcoming rulemaking and interpret what is and is not permissible under GENIUS.

Timeline and next steps for GENIUS rules

The OCC finalized its GENIUS rules ahead of the GENIUS Act’s implementation in January 2027. The rulemaking cadence now moves toward a broader multi-agency phase: the OCC’s action covers the regulator’s lane, while other federal departments are expected to issue additional guidance related to stablecoin provisions under their respective authorities, including the Federal Reserve and Treasury.

In parallel, stablecoin yield remains entangled with ongoing legislative attention. Stablecoin rewards were a flashpoint during GENIUS’s passage and continue to be a subject of scrutiny. The debate also intersects with the Digital Asset Market Clarity Act, a crypto market structure bill described as currently in limbo after a failed procedure vote in the U.S. Senate last month, according to related reporting.

Meanwhile, ABA’s own position is bolstered by the timing: with the OCC rule already finalized, banks and their allies are focused on whether the final drafting will preserve Congress’s intended separation between payment stablecoins and deposit-based banking. Market participants, by contrast, will be watching for how the rule’s flexibility translates into real-world issuer behavior and product design.

As agencies prepare additional GENIUS-related rules in 2027, readers should watch for whether forthcoming guidance clarifies the permissible scope of indirect arrangements tied to stablecoin economics—and whether regulators converge on a shared standard for distinguishing yield from compliant compensation.