BPInsights: October 24, 2026

OCC GENIUS Act Rule Leaves Room for Ambiguity on Yield

On Wednesday, the OCC issued a final rule implementing the GENIUS Act, which establishes a regulatory framework for payment stablecoins. The GENIUS Act prohibits issuers from paying yield or interest on stablecoins and tasks the OCC and the other banking agencies with preventing evasion of that prohibition, which makes strong implementing rules around the prohibition crucial.

The final OCC rule omits a presumption from the proposal that certain arrangements between issuers and third parties to pay yield violate the prohibition on paying yield or interest. Instead of presuming that those arrangements violate the law, the OCC states that it will examine arrangements on a case-by-case basis, which will make it impossible to know whether the GENIUS Act's prohibition on the payment of interest or yield is being applied in practice.

• It fails to establish a transparent process for how the OCC will make these case-by-case determinations and for disclosing the outcomes.
• The OCC would presumably ban evasive practices, such as transactions involving indirect payments through affiliates or third parties with whom the issuer has a financial, contractual or business arrangement. However, without a clear presumption and transparent process, it is difficult to know which practices cross the line.
• The rule also sets reserve, liquidity and other requirements for stablecoin issuers under the OCC's jurisdiction.

BPI Executive Vice President and Co-Head of Regulatory Affairs Paige Pidano Paridon issued the following statement in response:

"Stablecoin yield payments present a risk to the banking system and the communities it serves - the permissibility of yield arrangements should be clearly defined, not determined by opaque interpretation. In our comments on the proposal, we urged the OCC to provide transparency regarding arrangements it finds to be impermissible. The decision to omit the yield presumption replaces clarity with ambiguity and puts the banking system and its customers at risk of deposit flight."

Amplified Risks. The lack of clarity on yield in the final rule exacerbates the four key concerns articulated in a recent BPI post about sources of instability in stablecoins.

Five Key Things

1. OCC's Gould: Banks Are Prepared for AI Agent Threats

As global security agencies warned of critical vulnerabilities in popular Internet software that led foreign governments and businesses to take their websites offline, and Microsoft separately published news of China-linked attackers using malicious AI agents to infiltrate cloud infrastructure, OCC Comptroller Jonathan Gould signaled confidence in banks' security capabilities. Banks are well-positioned to defend their systems against threats from rogue AI agents, OCC Comptroller Jonathan Gould said this week in a Fox Business interview. Banks are using AI in their cybersecurity defenses, he noted, calling the technology a "powerful defensive weapon." "Banks are very focused on defending the frontier," he said. "Banks are some of the most fortified parts of our system, and we have been across the U.S. government very focused on making sure that they have the latest tools so they can defend themselves - not just the banks, but also the service providers that are part of that system as well."

2. In Storage or On Tap: Restoring Balance in Liquidity Regulations

The liquidity coverage ratio only recognizes stored liquidity - liquid assets like Treasuries or cash held as high-quality liquid assets. But including liquidity available for purchase from the central bank in the LCR would mitigate distortions in the ratio and therefore improve financial stability and credit availability to the economy, according to a new BPI analysis. In particular, expanding HQLA to include discount window borrowing capacity would allow banks to extend more credit to businesses and households while maintaining robust liquidity. Such changes would also enable the Federal Reserve to shrink its balance sheet more effectively. The note also explores the option of capping discount window borrowing at 15 percent of HQLA - an improvement over the status quo, but less effective than counting discount window borrowing capacity without limits, according to the note.

3. Ramp is Latest Fintech to Apply for Trust Charter

Fintech firm Ramp applied for an OCC national trust charter, marking the latest bid by a financial technology company to access such a license. The company said the charter would "allow the trust bank to offer fiduciary investment management and custody of digital assets," and that the firm would not take deposits or make commercial loans. Ramp offers services including corporate charge cards, expense management and bill payment. The news comes shortly after the Independent Community Bankers of America filed a lawsuit against the OCC over national trust charters for crypto firms.

4. The Ledger

Here's the latest in digital assets.

• Crypto Broker Sentenced on Laundering Charges. A federal judge in Manhattan sentenced Colombian crypto broker Leonardo De Jesus Zuluaga Duque to over 13 years in prison on charges of laundering $14.5 million worth of Tether, which facilitated drug transactions. Zuluaga Duque "operated a sophisticated international scheme to utilize cryptocurrency, a network of shell companies in the U.S. and Colombia, and numerous crypto accounts, to exploit the U.S. financial system to launder the proceeds of hundreds of millions of dollars in drug money," Manhattan U.S. Attorney Jamie McDonald said in a statement this week.
• DeFi 'Vaults' Draw Money to Risky Corner. Crypto "vaults," a form of decentralized finance, have attracted investors into an opaque, high-risk corner of the crypto market, according to the Financial Times, citing concerns from U.S. and European regulators. More than $10 billion has been deposited in vaults this year, compared to $4 billion at the beginning of last year, according to the FT.

5. BPI Urges Safeguards Against Evasion of Stablecoin Rules

In a comment letter this week, BPI urged the Treasury Department to prevent evasion of stablecoin restrictions under Section 3 of the GENIUS Act, the core "gatekeeping" provision of the law.

• Guard Against Evasion. BPI recommended that Treasury, alongside financial regulators, "ensure its regulations carry out Congress' objective that only payment stablecoins issued by permitted domestic or foreign issuers, and not unregulated stablecoins or similar substitutes, may be issued, offered, sold, or otherwise made available in the United States."
• Clarify Definitions. Treasury should define "payment stablecoin" broadly to cover equivalent and evolving products, while distinguishing payment stablecoins from tokenized and other deposits. They should also clarify which entities are considered stablecoin issuers and what constitutes issuance - for example, wrapped or bridged arrangements should be considered new issuances or prohibited evasion when they are used to evade the prohibitions of the GENIUS Act rather than to facilitate interoperability across blockchains. The letter also urges Treasury to clarify definitions around digital asset service providers.

To read the full letter, click here.

In Case You Missed It

Sixth Circuit Hears Oral Arguments in Key Interchange Case

The U.S. Court of Appeals for the Sixth Circuit heard oral arguments this week in Linney's Pizza v. Federal Reserve Board, a significant case on debit interchange fees. Restaurant Linney's Pizza LLC sued the Fed over the cap on debit interchange fees in Regulation II, accusing the Fed of allowing excessive costs in calculating the fee limit. In 2025, BPI and The Clearing House filed a motion to intervene in the case and defend Regulation II. The court will rule on that motion when it issues its decision in the case. BPI and TCH filed a motion for summary judgment later that year. A key issue in the case is whether the Fed exceeded its authority under the Durbin Amendment by including costs beyond incremental authorization, clearance, and settlement (ACS) costs when setting Regulation II caps. According to a summary of the arguments, Linney's Pizza argued that Congress did not permit the Fed to include a "third category" of discretionary costs, such as fixed ACS overhead, network processing fees and fraud losses. The Fed contends that the requirement that fees be "reasonable and proportional" allows it the discretion to include operational costs that are directly tied to transaction processing but are not purely incremental. Similar issues were debated in the Corner Post case, in which a U.S. district court in North Dakota ruled in favor of the plaintiffs. Similar issues were debated in the Corner Post case, in which a U.S. district court in North Dakota ruled in favor of the plaintiffs. The Board appealed to the 8th Circuit, which heard oral arguments in May, but has yet to issue a decision. BPI and TCH sought to intervene in that case but were denied intervenor status.

Traversing the Pond

Here's the latest in international banking policy.

• Braddick Outlines PRA Transparency Plans at Mansion House. New Prudential Regulation Authority chief Katharine Braddick outlined plans for a five-year strategy in a Mansion House speech on Thursday. The strategy centers on four priorities: resilience, growth, innovation and transparency. Braddick previewed a series of forthcoming reforms designed to strengthen operational resilience, streamline regulation and improve regulatory processes. As part of its growth and competitiveness initiative, the PRA will examine regulation's effect on the investment environment, availability of capital and pricing of services. Braddick also noted the recent release of "a second set of significant reforms to streamline the Senior Managers and Certification Regime." Aiming to enhance transparency and accountability in supervision, the PRA will provide a clearer line of sight into its plans and priorities and publish performance information.
• Basel Committee Seeks Input on GSIB Methodology. The Basel Committee on Banking Supervision is seeking comment on the methodology for calculating GSIB scores. This consultation aims to formalize the treatment that European regulators have used since 2022: for exposures within the European Banking Union, the Basel Committee calculates a parallel GSIB score that recognizes 66 percent of the reduction in score that would result if such exposures were treated as domestic. Any resulting decrease is capped at one GSIB bucket and cannot cause a bank to stop being a GSIB. The BCBS has also finalized changes to its framework addressing year-end "window dressing" - stock-based GSIB indicators will increasingly be calculated using averages during the year rather than year-end snapshots.
• Italy Cracks Down on Crypto Money Laundering. Italian authorities this week arrested 30 people accused of mafia-linked money laundering with cryptocurrency, according to Bloomberg. The network, which reached into Spain and Switzerland, used drug trafficking proceeds, fraudulent corporate invoices and bank accounts to move money abroad and into crypto wallets.

Member News

JPMorgan Brings Deposit Token to Ethereum

JPMorgan Chase this week announced the launch of the bank's JPM Coin deposit token on the Ethereum blockchain network. "Available to J.P. Morgan's institutional clients, the move extends the reach of institutional finance on public blockchain," the bank stated. To learn more, click here.

Huntington Launches AI Small Business Tool

Huntington Bank this week introduced the 1866 Studio, an AI-powered tool designed to help small business owners build and scale their companies. The platform uses Google's Gemini to combine business guidance, financial intelligence, digital tools and human expertise geared toward small business owners.

Job Openings

• Assistant Vice President, Research Analyst
• Assistant Vice President, Regulatory & Policy Affairs

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