The Office of the Comptroller of the Currency issued a proposed rulemaking on February 25, 2026, to implement provisions of the GENIUS Act covering national bank issuance of payment stablecoins. The move makes the OCC the third federal banking regulator, after the FDIC and the NCUA, to publish formal rules for how supervised institutions can enter the stablecoin market. Public comments are now open, and all federal regulators face a July 18, 2026, deadline to finalize their implementing regulations.
The stablecoin market sat above $260 billion as of late 2025, with monthly transaction volumes exceeding $1 trillion, roughly ten times the throughput recorded at the end of 2020. Until now, that entire market has operated with no comprehensive federal framework. The OCC's proposal is one of the final pieces that will determine whether traditional banks can compete with crypto-native issuers like Circle and Tether, or whether the incumbents lock in their advantage.
What the OCC Proposal Actually Does
The GENIUS Act, signed into law in July 2025, established the first federal regulatory framework for dollar-backed payment stablecoins in the United States. It designated several types of "permitted payment stablecoin issuers," including national banks, state-chartered banks, federal credit unions, and non-bank entities licensed under state regimes.
Each federal regulator is responsible for writing its own implementation rules for the institutions it supervises. The FDIC published its proposed rulemaking in December 2025, covering state-chartered banks. The NCUA followed in February 2026 for credit unions. Now the OCC has published its proposal for national banks and federal savings associations.
OCC Comptroller Gould had previously previewed the rulemaking, signaling it would address liquidity requirements, prudential restrictions, and operational standards for stablecoin issuers under OCC supervision. The proposed rule is expected to detail how national banks apply for authorization to issue payment stablecoins, what capital and reserve buffers they must maintain, and what ongoing supervisory examinations will look like.
The public comment period gives banks, crypto companies, consumer advocates, and anyone else a formal channel to push back or support specific provisions before the rules become final.
The GENIUS Act Framework: What Issuers Must Do
The core requirements under the GENIUS Act apply regardless of which regulator writes the implementing rules:
1:1 Reserve Backing. Every payment stablecoin must be backed at least 1:1 by high-quality liquid assets. Permitted reserve assets include U.S. dollars, Federal Reserve notes, funds at insured depository institutions, short-term Treasury securities, Treasury-backed reverse repurchase agreements, and certain money market funds. Fractional reserves are banned. Rehypothecation is prohibited except in narrowly defined circumstances.
No Interest or Yield. Section 4(a)(11) of the GENIUS Act states that issuers "shall not pay the holder of any payment stablecoin any form of interest or yield solely in connection with the holding, use, or retention of such payment stablecoin." This is the provision that sent shockwaves through the DeFi yield market when it was enacted. It means Circle cannot pay USDC holders interest directly, and no new bank-issued stablecoin can either.
Anti-Money Laundering. Permitted issuers are treated as financial institutions under the Bank Secrecy Act, subject to all federal sanctions, AML, customer identification, and due diligence requirements.
Federal or State Oversight. Issuers can choose federal or state regulation, but state regulation is capped at $10 billion in outstanding issuance. Any issuer above that threshold must submit to federal supervision.
The Yield Ban Loophole That Regulators Are Still Debating
The yield prohibition sounds straightforward until you look at how USDC actually works today. Circle's S-1 filing revealed that the company paid Coinbase $907.9 million in distribution fees during 2024, based on the proportion of USDC held on Coinbase's platform. The more USDC Coinbase custodies, the more Circle pays.
Meanwhile, Coinbase markets "3.85% rewards by simply holding USDC" to its users. The rewards are technically funded separately from Circle's issuer payments. But the economic substance, as Columbia Law School's CLS Blue Sky Blog has argued, looks a lot like interest payments laundered through a distribution agreement.
Over 40 banking associations have urged lawmakers to close this gap by extending the yield ban to affiliates and exchanges. If the OCC's proposed rule addresses this ambiguity, or if it punts to future interagency guidance, will determine whether stablecoin yield products survive in their current form.
For crypto card users, this matters directly. Several stablecoin-funded cards let users hold USDC or USDT balances and earn passive yield while spending. If the regulatory interpretation tightens, those yield programs could be restructured or eliminated.
Who Wins and Who Loses Under OCC Supervision
Winners: JPMorgan, Bank of America, Wells Fargo. National banks now have a clear regulatory path to issue their own payment stablecoins. The OCC's rulemaking gives them the application process, the supervisory expectations, and the legal certainty they need to compete. A JPMorgan-issued stablecoin backed by Treasuries with full OCC oversight would be a credible competitor to USDC overnight.
Winners: Circle. Paradoxically, stricter rules benefit Circle because USDC already meets most GENIUS Act requirements. Circle publishes monthly reserve attestations, holds Treasuries and cash, and recently filed for an IPO. Regulatory clarity is what institutional buyers need to feel comfortable allocating to USDC over USDT.
Losers: Tether (USDT). USDT sits outside the U.S. regulatory perimeter entirely. Tether has responded by launching USA₮, a separate, GENIUS Act-compliant token issued through a U.S. bank partner. But USDT itself, which dominates global trading volume, cannot serve as a permitted payment stablecoin under the Act. The OCC's rulemaking further cements the divide between compliant and non-compliant stablecoins.
Uncertain: DeFi yield protocols. Protocols that offer yield on stablecoin deposits are not directly regulated by the OCC. But if the interagency interpretation of "interest or yield" extends to downstream platforms, the DeFi ecosystem could face significant restructuring.
The July 2026 Deadline Is a Hard Wall
All primary federal payment stablecoin regulators, the OCC, FDIC, Federal Reserve, and NCUA, must finalize their implementing regulations by July 18, 2026. That is less than five months away.
The GENIUS Act itself takes effect on the earlier of January 18, 2027, or 120 days after the regulators issue their final rules. If the OCC finalizes on schedule, the entire framework could be live before the end of 2026.
This timeline creates urgency for every participant. Banks evaluating stablecoin issuance need to file comments now and begin preparing applications. Crypto-native issuers need to assess whether their operations comply. And card providers that rely on stablecoin spending infrastructure need to understand which tokens will remain permitted under the new regime.
The $260 billion stablecoin market is about to get a regulatory address. The OCC's proposed rulemaking is one of the last invitations to shape what that address looks like.
FAQ
What is the GENIUS Act? The Guiding and Establishing National Innovation for U.S. Stablecoins Act, signed into law in July 2025, is the first comprehensive federal regulatory framework for dollar-backed payment stablecoins in the United States. It establishes reserve requirements, licensing standards, and consumer protections for stablecoin issuers.
Can national banks issue stablecoins now? Not yet. The OCC's proposed rulemaking opens a public comment period. Once the rule is finalized, expected by July 18, 2026, national banks can begin the formal application process to become permitted payment stablecoin issuers.
Does the GENIUS Act ban stablecoin yield? The Act prohibits issuers from paying interest or yield to holders of payment stablecoins. However, third-party platforms like exchanges may still offer rewards programs funded separately, creating a regulatory gray area that the OCC's rulemaking may or may not address.
What happens to USDT? USDT cannot serve as a permitted payment stablecoin under the GENIUS Act because Tether is not a regulated U.S. entity. Tether has launched a separate compliant token, USA₮, issued through a U.S. bank. USDT will continue operating globally but outside U.S. regulatory recognition.
How does this affect crypto card users? Cards funded by USDC or other compliant stablecoins should operate normally under the new framework. Cards or platforms offering yield on stablecoin balances may need to restructure those programs depending on how regulators interpret the yield prohibition.
Overview
The OCC issued a proposed rulemaking on February 25, 2026, to implement the GENIUS Act for national banks seeking to issue payment stablecoins. This makes the OCC the third federal regulator, after the FDIC and NCUA, to publish formal implementation rules. Key requirements include 1:1 reserve backing with high-quality liquid assets, a ban on paying yield to stablecoin holders, full BSA/AML compliance, and federal oversight for issuers above $10 billion. The July 18, 2026, finalization deadline gives all stakeholders less than five months to comment and prepare. The $260 billion stablecoin market is entering its most consequential regulatory phase yet.
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