Paradigm Files Comment Letter on the OCC’s GENIUS Rulemaking

Today, Paradigm filed a comment letter with the Office of the Comptroller of the Currency in response to the agency’s proposed rule implementing the GENIUS Act. The OCC has put forward a thorough proposal about how payment stablecoin issuers should be licensed, supervised, and structured. That kind of careful engagement with the rule-writing task deserves recognition. But there are real issues with this proposal that, if not addressed, would damage Congress’s design for stablecoins.

Our biggest concern is the OCC’s treatment of the GENIUS Act’s yield provisions. The Act prohibits permitted payment stablecoin issuers from paying holders interest or yield solely in connection with the use or holding of a payment stablecoin. The OCC’s proposal stretches that narrow prohibition into a broad blanket that threatens to cover much of the industry. This expansion goes beyond what Congress authorized in two significant ways.

• First, the proposed rule would apply the prohibition not just to issuers but to “related third parties” that are neither issuers nor under common ownership or control of an issuer. Congress drew this line deliberately: it knew how to capture indirect arrangements when it wanted to (and did so elsewhere in the Act), and its decision to limit the yield prohibition to issuers should not be overridden through rulemaking.
• Second, the OCC’s proposed rebuttable presumption, under which certain arrangements involving affiliates or third parties are assumed to involve the paying of yield, departs from the statutory text without adequate justification. We urge the OCC to withdraw the extension to third parties and to substantially narrow and clarify the rebuttable presumption.

After mooring the proposed rule to the statutory text, we also recommend that the Final Rule codify meaningful safe harbors for independently-initiated reward programs, flat non-yield-linked payments, and arrangements that merely consider stablecoin holding as one factor among several. All of these interactions are in keeping with the statute’s own “solely” qualifier, which was Congress’s direction.

Finally, we propose that the Final Rule include procedural protections for issuers who structure their programs in good faith reliance on the OCC’s regulations and guidance, including a 90-day cure period before civil money penalties can be assessed. Without these guardrails, the OCC’s broad discretion creates risk of weaponization by future administrations hostile to stablecoin innovation.

Our letter also raises three additional issues. First, on white-labeling, we recommend the OCC decline to restrict issuers to a single stablecoin brand, which the Act does not authorize and which isn’t necessary to address the OCC’s proffered concerns. Second, on reporting, we recommend replacing an onerous weekly cadence across eight underdefined data categories with a monthly reporting model aligned with the Act’s existing disclosure requirements. And third, on multi-chain operations, we recommend that the OCC clarify that cross-chain transfer mechanisms are treated as routine payment activity rather than new issuances.

The OCC’s rulemaking is one of the most consequential pieces of GENIUS Act implementation, and getting it right matters for the long-term health and competitiveness of the U.S. stablecoin market. We’re grateful for the agency’s engagement and look forward to continued dialogue as the Final Rule takes shape. But it is important that the OCC gets this rulemaking right. Stablecoin adoption sits at a moment of inflection. If we get the rules right over the next two and a half years, American firms could dominate this space for the next twenty-five. The OCC should address these issues so that the space can run expeditiously to greater and safer adoption in line with the goals of GENIUS.

You can read Paradigm’s full comment letter here.