The U.S. Office of the Comptroller of the Currency has proposed new rules implementing the GENIUS Act that could restrict stablecoin reward programs. Experts suggest these rules might affect Coinbase‘s popular USDC rewards arrangement with issuer Circle, which generated $1.3 billion in stablecoin revenue for Coinbase last year. While some industry leaders criticized the proposal, others commended the regulator. The rules are not final and are open to public comment, with the banking lobby continuing to push for stricter, permanent restrictions on stablecoin yield.
A key Treasury Department bureau released a preliminary 376-page rulemaking detailing how it will implement the stablecoin-focused GENIUS Act. The proposed rules include several sections prohibiting certain stablecoin rewards arrangements between issuers and third parties.
This language could impact the current arrangement between Circle and Coinbase, where yield is shared and passed to users. Multiple crypto policy leaders stated the proposed language could affect Coinbase’s USDC rewards program, though they noted its complexity and potential for workarounds.
One policy leader suggested Coinbase was always likely to need adjustments following the GENIUS Act’s implementation. The company, which did not immediately respond to a request for comment, reported $1.3 billion in stablecoin revenue last year and cited its USDC rewards as a key growth driver.
Some crypto executives denounced the proposal as regressive. Finance lawyer Scott Johnsson told reporters he thinks the language “most likely does” impact Coinbase’s program but expects the rule to be challenged and changed.
Conversely, Circle‘s head of global policy commended the OCC on its proposed regulations, a sentiment echoed by CEO Jeremy Allaire. Allaire stated, “This is all part of accelerating U.S. leadership in transforming the economic and financial system and rebuilding it natively on the internet.”
A banking industry source, however, said the announcement did not give them much comfort, emphasizing rulemakings “can always be changed.” The banking lobby prefers permanent legal restrictions, fearing stablecoin rewards could draw customers from traditional accounts.
Todd Phillips, a law professor, said the proposed rules would not satisfy the “two warring sides.” Negotiations on stablecoin yield remain ongoing as part of broader crypto market structure bill discussions.
