US Regulator Proposes Stablecoin Yield Freeze
A U.S. banking regulator has floated new rules that would severely limit how third parties can distribute yield from stablecoins. The move could directly threaten Coinbase's business model and broadly reduce DeFi yield opportunities for American users.
The Office of the Comptroller of the Currency (OCC) released the 376-page proposed rule to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which was signed into law in July 2025. The proposal is now open to a 60-day public comment period before being finalized. At its core, the rule operationalizes the GENIUS Act's ban on paying interest on stablecoins. It specifically creates a "rebuttable presumption" that an issuer is violating the ban if it pays an affiliate or third party, like an exchange, who then passes that yield on to the stablecoin holders. This directly targets the revenue-sharing model between Circle and Coinbase for USDC. In 2025, stablecoin-related activities generated an estimated $1.35 billion for Coinbase, representing 19% of the company's total revenue for the year. Coinbase CEO Brian Armstrong has stated that a ban on paying yield to users could, counterintuitively, make the company more profitable. Under such a rule, Coinbase would likely keep the revenue share from Circle's USDC reserves instead of passing the majority of it along to customers. The proposal is a key development in a larger battle between the crypto industry and banking lobbyists, who argue that yield-bearing stablecoins could drain deposits from traditional banks and create financial instability. Beyond the yield prohibition, the extensive proposal also outlines a $5 million minimum capital requirement for new stablecoin issuers. It further details strict requirements for reserve management, custody, and redemption mechanics to treat stablecoin issuance as a closely supervised financial activity.
