By Marcus LeeFederal banking regulators ruled on Wednesday, October 21, 2026, that digital asset platforms can continue paying crypto interest-like rewards to customers holding stablecoins. Published by the Office of the Comptroller of the Currency (OCC) under the GENIUS Act, the regulations rejected lobbying from traditional banks that warned high-yield token programs could drain trillions in deposits.
OCC Splits Rules Between Stablecoin Issuers and Exchanges
The regulatory framework implements the GENIUS Act, which President Donald Trump signed into law at the White House on July 18, 2025, to codify federal rules for stablecoin issuers. Under the OCC guidelines published October 21, direct stablecoin issuers such as Circle remain prohibited from paying interest directly to individuals holding their coins.
However, the exchanges and brokerages that trade and custody those tokens—including Coinbase, Robinhood, and rival platforms—are permitted to pass along underlying earnings to customers as interest-like rewards on a case-by-case basis. Stablecoins are engineered to maintain a steady value of $1 per coin and are backed by commercial bank deposits and U.S. Treasury securities that earn interest.
Who captures the interest generated by those backing bonds and cash reserves sits at the center of an intense Business clash between Wall Street banks and digital asset firms. For example, Coinbase currently offers retail customers yields of up to 3.5% on USDC balances, whereas the average traditional bank savings account pays just 0.38%, according to the latest figures from the Federal Deposit Insurance Corporation (FDIC).
Banking Lobby Warns of Deposit Flight and Lending Cuts
Banking trade groups lobbied aggressively for an outright ban on exchange-paid stablecoin rewards because digital platforms routinely offer yields nearly ten times higher than standard savings accounts. Industry executives warned that if stablecoins outcompete traditional bank accounts on yield, savers could shift trillions of dollars out of banks and into digital tokens, a phenomenon known as deposit flight.
Traditional lenders argued that widespread deposit outflows would reduce banks’ capacity to originate mortgages, auto loans, and commercial credit, and in a worst-case scenario could cause smaller community banks to fail. How stablecoins affect local banking deposits was also a major flashpoint in Congress when lawmakers drafted the CLARITY Act.
In a formal statement on Wednesday, the American Bankers Association (ABA) warned that the OCC decision threatens the deposit funds that U.S. banks rely on to power economic lending. The banking group added that the rule preserves the status quo for digital platforms despite congressional intent to safeguard local community lending.
Consumer Advocates Cite Lack of Deposit Insurance
Consumer advocacy organizations, which frequently clash with banking lobbyists over financial rules, allied with traditional lenders on the stablecoin reward dispute. Watchdogs warned that retail users may view exchange reward programs as equivalent to traditional interest-bearing bank accounts without understanding the structural risks.
Unlike commercial bank accounts protected by FDIC insurance, cryptocurrency platforms have no federal deposit insurance backstop if an exchange or issuer suffers a liquidity crisis. Phillip Basil, director of economic growth and financial stability at Better Markets, stated that the OCC rule gives stablecoin firms a free pass to conduct banking activities without the safety protections that guard the banking system. As digital brokerages prepare to expand case-by-case reward offerings under the new framework, commercial banks are expected to press lawmakers for stricter reserve and yield caps in upcoming financial legislation.
