Bank Policy Institute Criticizes OCC's Stablecoin Reward Rule

The Bank Policy Institute (BPI) has criticized the Office of the Comptroller of the Currency (OCC) regarding the final stablecoin rule, particularly how it assesses rewards for stablecoin holders through third parties. BPI's October 24 newsletter highlights that case-by-case decisions create uncertainty around stablecoin reward arrangements. The dispute centers on the implementation of the issuer yield prohibition, with the OCC's broader GENIUS Act rule set to take effect on January 18, 2027. BPI objects to the removal of a proposed presumption for certain issuer arrangements, arguing that the new approach lacks a transparent decision-making process. The OCC's rule aims to provide a framework for reserve backing, redemption, and risk management, while BPI's concerns reflect potential competitive impacts rather than evidence of immediate outflows due to the new rule. The distinction between reserve income from payment tokens and customer incentives complicates regulatory interpretations. For example, a payment app discounting purchases differs from one that pays users for holding tokens, affecting how these arrangements are treated under the rule. Clear reasoning from the OCC would aid firms in understanding regulatory expectations, as the complexity of product boundaries increases. The scrutiny of transaction purposes is also linked to wallet and financial-crime controls, emphasizing the need for clarity in economic relationships behind transfers.

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