OCC Stablecoin Yield Ban Faces Opposition Amid Crypto Industry Uncertainty

The GENIUS Act, a law aimed at regulating stablecoins, has sparked controversy over its proposed implementation by the Office of the Comptroller of the Currency (OCC). Phantom Wallet and Consensys have expressed opposition to the OCC's plan to ban stablecoin yield via third-party apps. According to these companies, the GENIUS Act only restricts stablecoin issuers from offering interest, not third parties.

The argument is that stablecoins deposited in decentralized finance (DeFi) platforms are active investments, and any yield accrued comes from the DeFi platform, not the issuer. This means that third-party apps, such as those used by DeFi platforms, should not be targeted by the ban. Consensys notes that the GENIUS Act deliberately carves out non-custodial software interfaces from regulated intermediary status.

The OCC's proposal has also been met with support from bankers, who argue that a broader prohibition on stablecoin yield is necessary to prevent 'anything less from working.' However, it remains to be seen whether the latest update will be a deal-breaker for the crypto industry. The GENIUS Act was passed into law last July and is set to be implemented by July this year.