The Office of the Comptroller of the Currency has reportedly drawn a line that could shape competition between banks and crypto platforms: stablecoin issuers would remain barred from paying interest directly to holders, while exchanges and custodial platforms could continue offering interest-like rewards in some circumstances.
The distinction, described in an Associated Press report published by the Orange County Register, is consequential because rewards have become a customer-acquisition tool for platforms holding dollar-linked crypto assets. Banking groups say the practice could pull funds from insured bank accounts and weaken a source of lending capacity. Crypto customers, meanwhile, may see a higher advertised return, but not the deposit insurance associated with a traditional bank account.
A boundary between issuers and platforms
Stablecoins are crypto tokens intended to hold a steady value, commonly one dollar. The AP report describes their backing as bank deposits and U.S. Treasuries, assets that generate interest. Its account says issuers including Circle remain prohibited from paying interest to people simply for holding their coins.
Platforms that trade or safeguard stablecoins occupy a separate category under the reported approach. Coinbase and Robinhood were among the companies identified as able to pass interest-like rewards to customers on a case-by-case basis. The reporting does not establish that every program qualifies, nor does it provide the conditions governing an individual platform’s eligibility.
That is more than a semantic separation. A prohibition aimed at the issuer limits a stablecoin’s ability to function as a yield-bearing instrument at its source. Permitting a third-party platform to offer rewards, subject to regulatory review, leaves a route for customers to receive a return in connection with holding the asset. The AP account does not establish how any particular platform funds a reward program, so the reported allowance should not be read as a finding that all rewards derive from the same source of income.
The action was reported as part of implementation of the GENIUS Act, the federal stablecoin law signed in July 2025. A Richmond Journal of Law & Technology overview describes the law as a framework for federal regulation of payment stablecoins. The Oct. 21 report suggests that one early implementation question is how far the law’s yield restrictions reach beyond an issuer itself.
Rewards comparison sharpens the deposit debate
The economics behind the banks’ objections are visible in the yields cited in the report. Coinbase was said to offer rewards of up to 3.5% on USDC balances, compared with a 0.38% average traditional savings-account yield reported by the Federal Deposit Insurance Corp. The difference is 3.12 percentage points. On those stated figures, the top advertised USDC rate is a little more than nine times the cited average savings yield.
That comparison is useful but limited. “Up to” is not the same measure as an average rate, and the reporting does not establish account minimums, geographic availability, eligibility requirements, variable-rate terms or whether customers can obtain the maximum reward. It nonetheless illustrates why banks view crypto-linked rewards as competitive with cash-management and savings products, even when the legal structure is different.
The American Bankers Association told the AP that the outcome threatens funding that banks use to make loans and argued that it preserves the existing position for crypto platforms. Industry advocates have warned that a large movement of deposits could reduce banks’ lending capacity and, in an extreme scenario, contribute to bank distress. Those are forecasts and lobbying arguments, not measured effects of the reported guidance. No evidence in the account shows that deposit outflows have occurred because of this regulatory step.
Better Markets also criticized the approach, arguing that it permits bank-like activity without the protections used in banking. The concern points to a consumer issue separate from the advertised yield: the AP report says crypto reward arrangements have no equivalent of FDIC deposit insurance. A stablecoin balance or a platform reward program should therefore not be treated as an FDIC-insured deposit merely because its value is designed to track the dollar.
Key operating details remain unconfirmed
The reported policy direction is clear enough to frame the competitive dispute, but the operative regulatory details cannot be established from the published account alone. The AP report describes a case-by-case approach, yet neither it nor the legal overview supplies the underlying OCC text, a docket link, an effective date, defined terms, program conditions or an enforcement process.
Those details will determine the practical breadth of the decision. A standard focused narrowly on direct issuer payments could preserve many existing platform programs; a broader test could constrain arrangements in which an issuer, affiliate and platform have closely connected roles. The published reporting does not resolve that question.
For now, the most supportable reading is narrower: issuers remain subject to a reported ban on paying interest directly to stablecoin holders, while some exchanges and custodial platforms may retain the ability to offer interest-like rewards. The resulting gap between a 3.5% advertised USDC reward and the 0.38% average savings yield cited in the report helps explain why the boundary has become a focal point in the fight over bank deposits.