Executive Summary
- What’s new: The OCC has issued its final rule implementing the GENIUS Act for issuers under its jurisdiction. The final rule departs in a number of significant respects from the proposed rule that the OCC published earlier this year. The OCC will offer a waiver process for existing and prospective payment stablecoin issuers to avoid violating the GENIUS Act on the first day of its effectiveness, which is fast approaching.
- Why it matters: The GENIUS Act will go into effect on January 18, 2027, with no ramp-up or transition period. After that date, entities issuing a payment stablecoin in the United States or to U.S. customers other than as an approved permitted payment stablecoin issuer will be subject to penalties. A waiver is available only to issuers with a substantially complete application pending with the OCC on or before that date.
- What to do next: Existing issuers should consider filing applications and waiver requests as soon as the OCC opens submissions. However, for prospective stablecoins, the OCC generally expects them to begin operations in the United States after they have received OCC approval.
- What else: In this client alert, we link to our “Be Ready on Day One” timeline and the OCC’s proposed licensing and registration forms that were posted on October 28, 2026.
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On October 21, 2026, the Office of the Comptroller of the Currency (OCC) issued a final rule implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act for payment stablecoin issuers subject to its jurisdiction, together with Bulletin 2026-51, which addresses applications and waiver requests.
The GENIUS Act, signed into law on July 18, 2025, established the first federal framework for payment stablecoins. It creates a category of permitted payment stablecoin issuers (PPSIs), prohibits anyone other than a PPSI from issuing payment stablecoins in the United States and leaves many substantive requirements — including capital, liquidity and risk management — to the primary federal regulators, including the OCC.
The OCC’s final rule includes a number of significant departures from its proposed rule, which was published on March 2, 2026. Among other changes, the final rule:
- Eliminates the proposed presumption that certain activities violate the GENIUS Act’s prohibition on paying yield.
- Narrows the definition of who is a “customer” of an issuer.
- Declines to limit issuers to a single brand.
Critically, the OCC will offer a waiver process for existing and prospective payment stablecoin issuers to avoid violating the GENIUS Act on the first day of its effectiveness, which is fast approaching.
The GENIUS Act and the rule will both become effective on January 18, 2027. We describe below key provisions of the final rule and the significance of the OCC’s departure from what it had initially proposed.
Yield: Presumption Eliminated, No Safe Harbors
The Issue
One of the most contested questions in the enactment of the GENIUS Act was whether stablecoin issuers could pay holders interest or yield generated by the reserves backing their stablecoins. Banks have generally expressed concern that stablecoins paying competitive interest would become a substitute for bank deposits, drawing funding away from the banking system, and particularly from community banks.
Congress resolved the question by prohibiting a PPSI from paying holders any form of interest or yield, whether in cash, tokens or other consideration “solely in connection with” the holding, use or retention of a payment stablecoin.
The GENIUS Act does not, however, expressly address payments that reach holders through someone other than the issuer, such as an exchange, wallet provider or brand partner that distributes the stablecoin and offers its own rewards program.
The Proposal
The OCC’s proposed rule would have presumed a violation where an issuer had an arrangement to pay interest or yield to an affiliate or a “related third party” (defined to include white-label partners and yield-as-a-service providers) where that party in turn paid holders. The issuer could have overcome the presumption only by persuading the OCC, through a written submission, that the arrangement was permissible.
The Final Rule
The OCC eliminated the presumption, concluding that it would be both overinclusive (sweeping in legitimate arrangements) and underinclusive (implying that arrangements falling outside it are permissible), and that it would impose burden without commensurate benefit.
Although the statutory prohibition in the GENIUS Act remains, as does the OCC’s authority to prevent evasion of it, the elimination of the presumption raises several questions, including:
- Paying through a third party. An issuer cannot accomplish indirectly what it is prohibited from doing directly. If an agent acting on the issuer’s behalf pays yield to holders, the payment is treated as the issuer’s own. Similarly, if an issuer simply pays a third party so that the third party can pass yield on to holders, the OCC regards that as a clear evasion of the prohibition. By contrast, a payment by a third party that is not made solely because the holder holds, uses or retains the stablecoin falls outside the prohibition. Whether a particular arrangement falls on one side of that line or the other will be highly fact-specific. The OCC will evaluate such arrangements in connection with issuer applications and as part of supervisory examinations.
- The meaning of “solely.” Because the GENIUS Act prohibits only payments made “solely” in connection with holding, use or retention, a payment made to a partner for a bona fide service, such as marketing, distribution, compliance or technology, absent facts suggesting the contrary, is not prohibited. The OCC will read the word according to its plain meaning, but it will look past the label to the substance of an arrangement where the other stated purpose is nominal.
- No definitions or safe harbors. Many commenters asked the OCC to define key terms such as “interest,” “yield” or “pay,” or to identify arrangements that would be deemed permissible. The OCC declined to define those terms, emphasizing that it will look to economic substance rather than labels. It also declined to adopt safe harbors for small (de minimis) payments, white-label partners or arrangements regulated under the securities laws.
- Deposits. The prohibition applies to payment stablecoins only. Interest paid on bank deposits, including deposits recorded in tokenized form on a blockchain, is not affected.
- No cure period. The OCC declined to provide a period in which an issuer could correct a violation before facing consequences, although it will exercise enforcement discretion based on the facts and circumstances.
Why It Matters
The OCC will monitor arrangements for payment of yield and interest closely through the licensing and supervisory process, so applicants and current issuers should expect to explain the economic substance of their rewards, distribution and revenue-sharing arrangements in their applications and as part of ongoing supervision to support their position on compliance with the GENIUS Act.
Key Definitions: ‘Customer’ and ‘Payment Stablecoin Holder’
The Issue
The OCC has drawn a clearer distinction between a stablecoin issuer’s customers and the broader population of people who hold its stablecoins. That distinction has meaningful implications for issuers’ compliance obligations, customer notifications, information protection, distribution arrangements and the treatment of secondary-market holders.
This clarification is necessary because stablecoins are frequently acquired not from the issuer but from exchanges, wallet providers and other intermediaries, and then circulate freely on public blockchains. The OCC’s revisions to the definition of “customer” and “payment stablecoin holder” respond directly to concerns that the proposed definition of “customer” could encompass individuals with whom an issuer has no direct relationship and create confusion as to the population to which an issuer owes those duties.
The Proposal
The proposal defined “customer” as any person that purchases the products or services of another person. Commenters observed that this definition could reach persons with only an indirect relationship to the issuer, such as an individual who bought the stablecoin on an exchange, leaving issuers responsible to persons they could not identify.
The Final Rule
The final rule narrows “customer” to a person who buys an issuer’s products or services directly from the issuer, or who makes a request directly to the issuer to convert, redeem or repurchase a payment stablecoin. Thus, a person who approaches an issuer directly to redeem a stablecoin can become a customer even if the person originally acquired that stablecoin through an exchange, wallet provider or unrelated intermediary.
This is a deliberate middle ground between limiting customers to the issuer’s original purchasers and treating every downstream holder as a customer.
The final rule also adds a new defined term, “payment stablecoin holder,” meaning the beneficial owner of a payment stablecoin. This distinguishes the person who economically owns a stablecoin from a person, such as a custodian, who merely controls it on another’s behalf.
Why It Matters
- Information security and notification. This is one of the strongest practical justifications for the change. The proposed definition raised the possibility that an issuer’s notification obligations could reach people whose identities or contact information the issuer did not possess.
- Distribution and white-label models. A person who acquires a stablecoin from a distributor, including a white-label partner, is not the issuer’s customer, and therefore the issuer does not have certain obligations to that person. An exception is where the distributor is acting as the issuer’s agent, which will be a threshold question in defining an issuer’s customer base, or where the holder of a white-label stablecoin requests redemption from the issuer. (The definition of “customer” under the final rule, however, does not affect the definition of “customer” for purposes of other laws and regulations, including privacy laws and the Bank Secrecy Act (BSA) and its implementing regulations.)
- Redemption rights extend to all holders. The narrower “customer” definition does not include the issuer’s obligation to redeem its stablecoin from any holder (even if not a customer to that point) because a holder can become a customer by making a request directly to the issuer to convert, redeem or repurchase a payment stablecoin.
- Application of the yield prohibition. The final rule applies the yield prohibition to payments to “payment stablecoin holders,” not merely to customers. The OCC specifically connects this distinction to the prohibition on paying interest or yield. Its objective is to identify the person who economically benefits from the payment, rather than merely the person who possesses or controls the stablecoin.
Side-by-Side Comparison of Key Definitions
| Issue | Proposed Rule (March 2, 2026) | Final Rule (October 21, 2026) |
|---|---|---|
| Customer | A person purchasing products or services from another person, for consideration. | A person purchasing products or services directly from the issuer, or directly requesting conversion, redemption or repurchase from the issuer. |
| Direct relationship | Not expressly required. | Expressly required, including through a direct redemption request. |
| Secondary-market holder | Potentially captured by the broad definition. | Not a customer merely by acquiring or holding a stablecoin through a third party. |
| Payment stablecoin holder | Not separately defined. | Defined as the beneficial owner of a payment stablecoin. |
| Custodian holding on behalf of others | Ambiguity concerning holder status. | Not a holder merely because it controls stablecoins for beneficial owners. |
| Principal effect | Potentially extensive obligations involving indirect holders. | Separates issuer-customer relationships from beneficial ownership. |
Multibrand and White-Label Issuers
The Issue
Many stablecoin business models rely on a single licensed issuer issuing several stablecoins under different brands, including “white-label” stablecoins issued for and marketed under the brand of a partner such as a fintech or retailer. Following enactment of the GENIUS Act, some commenters argued that each issuer should be limited to a single brand, so that problems with one stablecoin — such as a loss of confidence that prompts heavy redemptions — could not spread to the issuer’s other stablecoins backed by the same reserves (so-called contagion risk).
The Final Rule
The OCC declined to adopt a one-brand-per-issuer restriction. It acknowledged that such a restriction could reduce contagion risk and protect holders in an insolvency, but concluded that the restriction was not clearly required by the statute and would impose significant burden. Under a one-brand rule, each brand would require a separate legal entity with its own license and supervision, duplicating regulatory obligations and, as commenters noted, potentially making white-label arrangements uneconomic for all but the largest partners.
Single issuer, multiple brands. The final rule does not require a separate reserve pool for each brand, and the OCC expressly declined to follow the Federal Deposit Insurance Corporation’s (FDIC’s) proposal, which would require multibrand issuers to maintain segregated reserves for each brand absent written approval. That does not end the inquiry, however. In reviewing an application, the OCC will determine on a case-by-case basis whether the holders of each brand are adequately protected, including in an insolvency, and may impose conditions. An issuer that wishes to segregate reserves by brand, or to show that its brands are adequately protected without full segregation, should be prepared to present its mechanism (for example, custodial subaccounts, trusts, statutory cell structures or token-level ring-fencing) during licensing, along with the steps it takes to prevent stress in one brand from spreading to the others.
Several related provisions to note:
- Redemption notices by brand. An issuer must notify the OCC within 24 hours when redemption requests exceed 10% of outstanding issuance in a 24-hour period (discussed below). That threshold is measured brand by brand, so a run on a single brand will trigger notice even if the issuer’s aggregate redemptions remain modest.
- Heightened yield risk. Because white-label partners are economically aligned with the issuer, the OCC indicated that payments to and from those partners may be more likely to be viewed as made on the issuer’s behalf. Rewards programs offered by white-label partners therefore warrant particular scrutiny under the yield prohibition, and there is no safe harbor for them.
Waivers and the Application Process
Existing issuers that are not currently in compliance with the final rule face a compressed timeline to come into compliance. The GENIUS Act takes effect on January 18, 2027, without a transition period. Absent an OCC approval for a GENIUS Act license by that date, an issuer would be in violation and subject to criminal penalties. However, any potential and current issuer that has an application pending with the OCC on or before that date is eligible to request a waiver not to exceed 12 months to comply with certain requirements.
Because a waiver depends on a substantially complete application pending by January 18, 2027, and filings open only after Office of Management and Budget (OMB) approval, the time period is highly compressed. Accordingly, issuers should consider beginning work now to file a complete application and a tailored waiver request when the window opens.
Applicants should expect detailed engagement during licensing on:
- Yield-related arrangements.
- Customer and distribution relationships.
- Brand structures.
- Reserve segregation.
- The ability to convert reserves to cash.
- Individualized capital levels.
Applications and waiver requests will be accepted once the OMB approves the related information collection, which the OCC will announce by press release. Potential applicants can find more information on the OCC’s GENIUS Act landing page.
Application Timeline
- Completeness. The OCC will determine whether an application is substantially complete within 30 days of receipt and within 30 days of any supplemental submission. An application that remains incomplete for 60 days after a deficiency notice will be returned.
- Decision. A substantially complete application is deemed approved on the 120th day unless the OCC denies it. For applications filed before the effective date, that period begins on the later of January 18, 2027, and the date the application becomes substantially complete.
- Denial. The OCC must explain a denial in writing within 30 days. An applicant may request a hearing within 30 days and may reapply.
In addition to the factors specified in the GENIUS Act, the final rule requires the OCC to consider the applicant’s ability to operate safely and soundly, including whether its structure addresses the risk of a run and ensures redemption.
For more information on critical application and waiver request timing considerations, refer to Skadden’s “Be Ready on Day One” timeline and review the OCC’s proposed licensing and registration forms that were posted on October 28, 2026. These forms are not final; the comment period for them closes on November 23, 2026.
Other Notable Changes
Reserves and Liquidity
The issue. The GENIUS Act requires a PPSI to back its stablecoins at least one-for-one with specified high-quality assets, such as cash, deposits and short-term Treasury bills, and directs regulators to set liquidity and diversification standards so that the issuer can meet redemptions promptly.
The final rule. The final rule adopts a principles-based diversification standard, supplemented by two numerical requirements: (i) at least 5% of reserves must be held in instruments such as demand deposits so that some funds are available immediately without selling any assets, and (ii) no more than 40% of reserves may be exposed to any single counterparty. Exposures to the U.S. government, assets held by qualifying custodians and centrally cleared repurchase transactions do not count toward the 40% limit; Federal Reserve Bank balances do. Issuers must conduct stress testing, demonstrate that they can convert reserves to cash under stressed conditions and, where their portfolio warrants, hold reserves in excess of outstanding issuance.
Redemption and Disclosures
The issue. The ability of holders to redeem stablecoins promptly at par is central to the GENIUS Act framework.
The final rule. The final rule requires redemption within two business days, starting when the issuer has received a redemption request and the customer has been onboarded, and ending when the issuer has initiated the outgoing transfer of funds. An issuer must notify the OCC within 24 hours if requests exceed 10% of a stablecoin’s outstanding issuance in a 24-hour period and may ask the OCC for an extension, which the OCC expects to grant sparingly (a marked change from the proposal, which applied an automatic, mandatory extension to seven calendar days during a redemption surge, absent OCC approval). Redemption fees are permitted if they are properly disclosed.
Capital Election for Uninsured National Trust Banks
The issue. Uninsured national trust banks are generally subject to the bank risk-based and leverage capital rules (12 C.F.R. Part 3). A trust bank that also issues stablecoins could therefore have faced two different capital regimes, one for its stablecoin business and another for its other activities.
The final rule. Any uninsured national trust bank, regardless of whether it issues payment stablecoins, may elect to comply instead with the GENIUS Act capital and operational backstop requirements, avoiding that bifurcation.
Open Questions and Anticipated Guidance
Several issues remain unresolved. The OCC will monitor yield-related arrangements through licensing and supervision, publish guidance as appropriate and anticipates a future rulemaking on the yield prohibition. The OCC may also revisit capital requirements for trust banks generally and plans to propose revised regulatory reporting for trust banks that make the capital election.
Separate rulemakings are expected on the capital treatment of digital assets held by banks and on capital equivalency deposits for federal branches:
- The OCC will later address BSA/AML (anti-money laundering) provisions of the GENIUS Act as part of a separate rulemaking, in coordination with the Treasury Department.
- The FDIC has yet to finalize its proposed rule originally issued for comment on April 4, 2026, with Chairman Travis Hill publicly indicating that the FDIC planned to issue its final rule soon after the OCC’s issuance.
- The Federal Reserve Board only recently issued its proposed rule for comment on September 29, 2026.
Finally, the development of interoperability standards, which the OCC will address in consultation with the other regulators and the National Institute of Standards and Technology, remains outstanding. In addition, the FDIC has yet to issue rules or guidance on the proposed deposit insurance treatment of reserve deposits.
Summary of Key Changes
| Topic | Proposed Rule (March 2, 2026) | Final Rule (October 21, 2026) |
|---|---|---|
| Yield prohibition | Rebuttable presumption that arrangements with affiliates and “related third parties” (including white-label partners) that pass yield to holders violate the GENIUS Act. | Presumption eliminated. Statutory prohibition applied case by case; no definitions of “interest,” “yield” or “pay”; no safe harbors; anti-evasion authority retained. Bona fide service payments generally permitted; deposits, including tokenized deposits, excluded. |
| Customer / holder | “Customer” meant any person that purchases the products or services of another person. “Stablecoin holder” undefined. | “Customer” limited to persons that purchase directly from the issuer or request conversion, redemption or repurchase directly from it. New “payment stablecoin holder” (beneficial owner). “United States customer” tested at onboarding. |
| White-label / multibrand | Comment requested on limiting each issuer to one brand. | No one-brand limit. Special purpose vehicle (SPV) structures accommodated, but each SPV is separately licensed. Per-brand segregation reviewed case-by-case; issuer name must be disclosed. |
| Waivers | Up to 12 months for pending applicants; limited to Section 4 of the GENIUS Act. | Extends to the GENIUS Act and OCC’s Part 15 generally. Bulletin 2026-51: OCC generally expects to waive only the Prior Approval Requirement, only for existing U.S. issuers. |
| Application process | Form-based filing; 30-day completeness review; 120-day decision; four statutory factors. | Adds conditional approval (single phase), a safety-and-soundness factor, a Corporate Background and Financial Report, a Section 4(a)(12) certification and return of filings incomplete 60 days after a deficiency notice. |
| Reserves | Option A (principles-based with safe harbor) or Option B (10% daily, 30% weekly, 40% per institution, 20-day weighted average maturity (WAM), insured deposit minimum). | Hybrid: principles-based standard plus 5% daily liquidity and 40% single-counterparty limit (with exclusions). Weekly liquidity, WAM and insured deposit minimum dropped; stress testing and buffer added. |
| Redemption | Two business days, without defined start or end points. Automatic seven-day extension if requests exceeded 10% of outstanding issuance in 24 hours. Redemption policy framed by reference to “customers.” | Two business days, with defined start and end points. Automatic extension replaced by 24-hour notice to the OCC (10% threshold measured per brand) and a discretionary OCC extension. Any onboarded holder may redeem any amount of one stablecoin or more; policy provisions recast by reference to “payment stablecoin holders.” No redemption required where it would violate other law. |
| Capital | Individualized capital; $5 million de novo floor; 12-month expense backstop measured quarterly. | GAAP tangible equity; $5 million floor at all times; up to 50% of backstop in qualifying subordinated debt; 24-hour shortfall notice. Uninsured national trust banks may elect the OCC’s Part 15 framework. |
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.