On May 1, 2026, Consensys Software Inc. submitted a comment letter to the Office of the Comptroller of the Currency (OCC), warning that the proposed U.S. stablecoin rules under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act could severely disrupt how digital dollar tokens are distributed to users. Bill Hughes, Senior Counsel & Director of Global Regulatory Matters, argued that the OCC’s interpretation extends the statutory yield ban beyond its intended scope.
Yield Ban Expansion Risks Distribution Chain
The GENIUS Act restricts stablecoin issuers from offering interest or yield to holders. However, the OCC’s proposed rule broadens this prohibition to cover “related third parties.” 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.” Consensys maintains that independent partners receiving commercial fees are not acting as issuers. Congress previously rejected broader language that would have applied the prohibition to non-issuers, indicating legislators did not intend such a wide reach.
This expansion could directly impact distribution networks that partner with issuers—such as banks, payment apps, and fintech firms—potentially barring them from offering stablecoins to end users. The result would be reduced market competition and limited consumer access.
DeFi Access and Non-Custodial Wallets at Risk
The letter also addresses decentralized finance (DeFi) interactions via non-custodial wallets. Consensys 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, harming DeFi integration.
Multi-Brand Issuance Restrictions Under Fire
Consensys also pushed back on potential limits on multi-brand issuance, warning that restricting issuers to a single branded product could weaken established distribution channels. Hughes said: “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 instead recommends disclosure requirements and, if necessary, reserve segregation to address risks without eliminating competitive flexibility.
Policy Conflicts and the May 2026 Compromise
The broader regulatory 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. Banking groups have warned of large-scale deposit migration to stablecoins, while a White House Council of Economic Advisers analysis found limited lending impact and estimated consumer welfare losses under a full prohibition. In May 2026, a compromise emerged distinguishing between passive yield tied solely to holding stablecoins and activity-based rewards linked to usage. This signals a shift toward regulating function rather than eliminating incentives altogether.
Consensys concludes that early regulatory decisions will determine whether stablecoins scale through broad market access or consolidate among a smaller group of issuers. The OCC is currently reviewing public comments; a final rule is expected by late 2026.