OCC Proposes Stablecoin Interest Ban, Paving Way for CLARITY Act

The U.S. Senate’s 616-page Digital Asset Market Clarity Act proposal seeks to establish a federal market structure for digital assets and delineate oversight between the Securities and Exchange Commission and Commodity Futures Trading Commission. Its stablecoin provisions address a central dispute between banks and crypto firms: whether payment tokens should compete with deposits. The draft treats payment stablecoins as uninsured digital cash for transactions and settlement, not as deposits or investment products.

An analysis published July 22 said the proposal would bar crypto platforms from paying U.S. customers interest solely for holding payment stablecoins. Rewards could remain permissible when linked to payments, remittances, liquidity provision, collateral, staking, governance or loyalty programs. If enacted, the SEC, CFTC and Treasury Department would have one year to jointly clarify the boundary and publish a nonexclusive list of permitted programs. Knowing and willful violations could draw civil penalties of as much as $5 million per violation.

The CLARITY Act aims to divide oversight of crypto assets between the US Securities and Exchange Commission and the Commodity Futures Trading Commission while strengthening the GENIUS Act’s restrictions on interest payments by stablecoin issuers. A central issue is whether platforms such as Coinbase may distribute rewards. Coinbase generated more than $1.3 billion in stablecoin-related revenue in 2025, and the rules could reshape platform business models and competition for bank deposits.

The US Senate Banking Committee released a revised 309-page draft on May 12 incorporating a compromise reached by Thom Tillis and Angela Alsobrooks on May 1. It would prohibit interest or yield paid solely for holding stablecoins while preserving activity-based rewards tied to transactions, payments and platform use. The committee approved the bill by a 15–9 vote on May 14 and sent it to the full Senate for consideration.

Stablecoins use fiat currency reserves to maintain their value and have gradually become a settlement tool for payments and crypto markets. The United States enacted the GENIUS Act on July 18, 2025, generally allowing only qualified issuers to issue stablecoins domestically. The law brings reserves, redemptions, capital and oversight under a federal framework, affecting market access for banks, nonbank firms and foreign issuers.

The Office of the Comptroller of the Currency proposed rules on February 25, 2026, covering reserve assets, custody, redemptions, risk management, audits, registration and capital backing. The comment period runs through May 1. The following day, Comptroller Jonathan Gould testified before the Senate Banking Committee alongside officials from the Federal Reserve and FDIC, with stablecoins and digital assets emerging as key regulatory topics.

The US president signed the GENIUS Act on July 18, 2025, establishing the first federal regulatory framework for payment stablecoins. These tokens are typically backed by US dollar assets and used for transfers and settlement. The new regime will shape competition between banks and crypto companies, while also affecting holders’ redemption rights and the development of the dollar-based payments system.

The Office of the Comptroller of the Currency unveiled proposed rules on July 17, 2026, requiring each $1 of payment stablecoins to be backed by at least $1 in eligible reserve assets. The proposal also sets risk-management, custody and operational standards. Designed to implement the GENIUS Act, the draft must still undergo public consultation and final rulemaking.