Stablecoin issuers will enjoy some rule flexibility, but stablecoin yield question still hangs in the air.
U.S. Office of the Comptroller of the Currency (OCC) yesterday released its final version of the rules that will be governing dollar-pegged stablecoins in the country under the stablecoin legislation called GENIUS Act. The Act was signed into law last year, but its implementation requires certain guidance, which is exactly what OCC now provides.
The new rules reflect some alleviations compared to the initial version. In particular, that applies to restrictions on how stablecoin issuers must manage their reserves. One of the changes is that the regulatory body eased the maturity limit conditions that would have prevented issuers from holding longer-term Treasuries.
At the same time, one of the biggest debates in the crypto community – stablecoin yield, remained unaddressed. In this respect, banks and crypto industry players have opposite opinions. Crypto firms believe that enabling some earnings options on stablecoin would give them a healthy competitive edge over banking institutions. Banks, in turn, voice risks that deposits will be out of the banking system, adding more uncertainty to the cash flows.
At present, more than 65% of American crypto traders are earning yield on stablecoins onchain. About one-fourth of traders regularly use yield-bearing stablecoin opportunities.
So far, GENIUS Act does prevent stablecoin issuers from paying interest directly, but this rule doesn’t apply to third-party players like crypto exchanges. According to the newest rules, they are technically allowed to offer customers yield on their idle stablecoin balances. However, the OCC will evaluate such offers individually to spot any possible arrangements between issuers and third parties designed to get around the law’s restrictions.
Other areas that have not been included in the final rule version released October 21 are the Bank Secrecy Act, anti-money laundering, and sanctions compliance requirements. These aspects will be addressed separately in coordination with the Treasury Department.
While rules are being finalized, GENIUS Act proposals remain open for public comment.
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