The American Bankers Association, joined by 52 state bankers associations, today submitted a comment letter to the Office of the Comptroller of the Currency urging the agency to strengthen its proposed rule implementing the Genius Act to ensure a meaningful and enforceable prohibition on interest and yield payments tied to stablecoins.
Separately, ABA also submitted its own detailed comment letter to the OCC expanding on these concerns and urging the agency to enforce the Genius Act’s yield prohibition in a way that reflects how the stablecoin market actually operates. ABA’s letter stressed that most payment stablecoins are distributed through exchanges and intermediaries — not directly by issuers — and that allowing yield to flow through those channels would defeat Congress’ central policy choice.
Both letters emphasize that allowing stablecoins to function as de facto yield bearing instruments would erode the traditional deposit base that supports bank lending to households, small businesses and local communities, ultimately harming economic growth.
Ramifications for community lending
In the joint letter, ABA and the state bankers associations warn that without stronger guardrails, stablecoin issuers could evade Congress’s explicit prohibition on yield by routing economically equivalent payments through exchanges and other third party intermediaries. While the OCC’s proposal establishes a helpful framework, the associations caution that gaps in the rule could allow yield like benefits to reach stablecoin holders indirectly — undermining the statute’s intent.
“The OCC should issue a broad prohibition because Congress required one, and because the evidence shows that anything less will not work,” the letter states.
The associations recommend targeted changes to close those loopholes, including broadening the OCC’s presumption so it applies regardless of how upstream payments are labeled, expanding the definition of “related third party” to capture distribution and promotion partners, and clarifying that yield may not be provided directly or indirectly when it arises from holding or using a stablecoin. They also urge the OCC to make clear that the statutory phrase “solely in connection with” cannot be used to evade the prohibition through nominal additional conditions, emphasizing the need for a workable supervisory standard that prevents cosmetic structuring designed to replicate yield.
ABA’s letter warns that a narrow or technical interpretation of the prohibition would invite widespread circumvention and create deposit substitution effects that could materially reduce lending capacity — particularly at community banks — while reshaping funding markets in ways Congress expressly sought to avoid. The letter urges the OCC to pair a clear, substantive prohibition on yield with strong presumptions against indirect payment structures, so that economically equivalent arrangements are treated consistently regardless of form.
The associations conclude by encouraging the OCC to use this rulemaking to establish a durable foundation for the broader federal stablecoin framework and to set a clear baseline that other regulators can apply consistently.
