OCC’s Draft Stablecoin Yield Rules Could Curb Coinbase’s USDC Rewards
The Office of the Comptroller of the Currency (OCC) released a 376-page proposed rule to implement the GENIUS Act, including provisions that would limit third parties from passing stablecoin yield or rewards to token holders. The language appears to prohibit arrangements where issuers and third parties share yield tied to the “holding, use, or retention” of stablecoins — a structure similar to Coinbase’s USDC rewards program with issuer Circle. Coinbase currently offers roughly 4% on USDC and cited stablecoin revenue as a key growth driver in 2025, reporting $1.3 billion in stablecoin revenue last year. Industry reaction is mixed: some legal and policy experts say the proposal likely affects Coinbase and expect subsequent legal challenges or changes; Circle’s leadership praised the proposal as advancing U.S. digital finance leadership. Banking lobby sources and some regulators want firmer restrictions to protect bank deposits; others note rulemaking can be revised during the 60-day comment period. The rule is not final and could be amended; its ultimate impact depends on regulatory clarifications and possible legislative or legal pushback.
Bearish
The proposed OCC rule directly targets the mechanism that enables platforms like Coinbase to offer above-market yields on stablecoins by sharing reserve yield with third parties. If finalized in restrictive form, Coinbase’s USDC rewards — a material revenue and user-retention product — would likely be curtailed or need restructuring, removing a competitive advantage that draws deposits into crypto platforms. That could reduce demand for USDC deposits on custodial exchanges, lowering short-term flow into stablecoin balances and related on-exchange liquidity. Market participants often sell or reduce exposure when protocols face regulatory risk, making short-term price pressure likelier for exchange tokens and stablecoin-linked products. Historically, regulatory threats to interest-bearing crypto products (e.g., staking restrictions or Earn-like program shutdowns) produced negative price reactions and outflows until clarity arrived. Over the longer term, impact depends on rule revisions, legal challenges, or workarounds: if the final rule is softened or firms adapt product structures, the bearish effect could be temporary and confined to deposit flows; if strict limits remain, traditional banks could regain some deposit share and crypto platforms would need new retail incentives, reducing margin and growth for exchanges. Traders should watch official rule text, comment-period developments, legal filings, and any interim product changes from Coinbase or Circle to time positions and manage risk.