On May 1, 2026, Consensys Software Inc. submitted a comment letter to the Office of the Comptroller of the Currency (OCC), warning that proposed U.S. stablecoin rules under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act could significantly disrupt how digital dollar tokens are distributed to users. Bill Hughes, Senior Counsel & Director of Global Regulatory Matters, argued that parts of the framework risk altering core distribution models.
Yield Ban Expansion Sparks Controversy
The central issue is how the OCC applies the GENIUS Act's ban on yield. The law restricts issuers from offering interest tied to stablecoin holdings, but Consensys argues the proposal extends that restriction beyond its statutory scope. Hughes stated: “The problem is that the OCC’s proposed rule extends the prohibition beyond issuers to ‘related third parties’, a category that, as drafted, sweeps in independent distribution partners that happen to co-brand or ‘white label’ a stablecoin.” The firm maintains that partners operating independently, even when receiving commercial fees, are not acting as issuers, and that Congress previously rejected broader language that would have applied the prohibition to non-issuers.
DeFi Access and Non-Custodial Wallets at Risk
Consensys also examined decentralized finance (DeFi) access through non-custodial wallets. The company explained that users who move stablecoins into lending protocols are actively deploying assets and accepting risk, rather than passively earning returns. Yield in these cases is generated by borrowing demand within the protocol, not by the issuer or wallet provider. Non-custodial software does not hold user funds or determine returns, aligning with statutory exclusions. Applying issuer-based restrictions here would mischaracterize the activity and could limit functionality for certain stablecoins.
Multi-Brand Issuance Concerns
Consensys pushed back on potential limits on multi-brand issuance, warning that restricting issuers to a single branded product could weaken established distribution channels. Hughes noted: “Prohibition forecloses the distribution model entirely rather than managing the risk it presents, and puts OCC-supervised issuers at a disadvantage relative to FDIC-supervised issuers, who face no equivalent restriction.” The firm recommends disclosure requirements and, if necessary, reserve segregation to address risks. It concludes that early regulatory decisions will shape whether stablecoins scale through broad market access or consolidate among a smaller group of issuers.
Broader Policy Landscape
The policy debate extends beyond the OCC proposal to the Digital Asset Market Clarity Act of 2025 (CLARITY Act), which targets gaps left by the GENIUS Act. While the GENIUS Act restricts issuers from offering yield, it does not explicitly address third-party intermediaries, creating ongoing debate over how rewards and lending features should be regulated. Banking groups have warned of large-scale deposit migration, while a White House Council of Economic Advisers analysis found limited lending impact and estimated consumer welfare losses under a full prohibition. A May 2026 compromise introduces a distinction between passive yield tied solely to holding stablecoins and activity-based rewards linked to usage, signaling a shift toward regulating function rather than eliminating incentives.