Something interesting is happening behind the scenes of U.S. stablecoin regulation that not many people seem to have noticed yet. The OCC has just released a regulatory proposal based on the GENIUS Act, and the section on stablecoin yields turns out to be very ambiguous—even controversial.

Here’s the gist: this 376-page proposal mostly looks straightforward. They discuss custody controls, capital requirements, and other standard regulatory items that are typical for the stablecoin sector. But the section explaining how stablecoin issuers and their partners can offer yield payments to users—that’s where the problem lies.

Some parties monitoring this process say the proposal is extremely ambiguous. Some claim that the OCC seems to be asserting authority to prohibit third parties from offering yields derived from holding stablecoins—beyond its authority. But others argue that the proposal is consistent with the language of the GENIUS Act, and they don’t see any issue with the yield ban that’s being imposed.

The proposal essentially states that stablecoin issuers must not pay stablecoin holders any form of interest or yield—whether cash, tokens, or other consideration—related to the ownership or retention of stablecoins. The OCC also acknowledges that issuers might try to make the prohibited interest payments through agreements with third parties.

Now, this is where it gets interesting. The OCC would consider these payments to be yields if there is a contract saying so, and a third party is defined as an entity that pays yields as a service. Companies could refuse and “deny the allegation” if they have evidence that their contractual relationship does not meet these terms.

Companies like Coinbase and Circle may have to adjust their relationship terms. The same goes for PayPal and Paxos, which issues PYUSD. Matthew Sigal from VanEck even said that companies like Coinbase should make their agreements look more like loyalty programs rather than interest payments.

There’s one part that is truly confusing—the definition of “affiliate.” A company could be either an issuer or an affiliate, and an affiliate may not be able to offer yields just because it holds. But the proposal appears to create a third category based on ownership shares. If an issuer owns 25% or more of a third party, they cannot offer yield payments. That creates a loophole for third parties without ownership problems like that.

Making everything even more complicated, stablecoin yields are also one of the issues that blocks progress on the much-anticipated crypto market structure legislation. Some say this OCC proposal might mean Congress doesn’t need to address yields at all in the market structure law. But others say there’s no way Congress will skip this part.

The market structure bill itself is still stuck on several other issues—ethical provisions regarding the crypto activities of President Trump and his family, plus anti-money laundering rules and know-your-customer requirements. But if the market structure bill really becomes law, it will change how stablecoins operate in the U.S.

As a result, it’s highly likely that parts of this OCC proposal won’t be implemented as written. If the market structure bill becomes law before the OCC finishes its rulemaking, regulators will have to issue an interim proposal to remain compliant. Otherwise, a separate rulemaking process will follow later.

So, in short, stablecoin regulation in the U.S. is still in a very dynamic phase. The ambiguity in this OCC proposal shows that even regulators themselves are still looking for the best way to regulate this sector without stifling innovation. This is definitely worth watching if you’re involved in the stablecoin or DeFi yield farming space.