So there’s an interesting point to note about the latest OCC proposal to regulate stablecoins under the GENIUS Act. At first glance, most of the provisions seem straightforward—custodial controls, capital requirements, and other usual regulatory technicalities. But once you get to the part about yields, everything becomes complicated and open to interpretation.

What makes the ambiguity unique is the parties monitoring this process. Some feel that OCC is actually claiming more authority than it should to prohibit third parties from offering yields on holding stablecoins. But others say the proposal aligns with the existing language of the GENIUS Act, so there’s no issue. So the ambiguity lies in how to interpret the regulatory authority here.

From what I understand, this proposal appears to limit how partner companies of stablecoin issuers can pay interest or yields. Essentially, stablecoin issuers cannot pay holders any form of interest or return—whether cash, tokens, or other forms—that are solely related to ownership or retention of the stablecoin.

OCC also acknowledges that issuers might try to circumvent this ban through agreements with third parties. They mention some such relationships but admit it’s impossible to identify all potential structures. However, OCC will consider payments as yields if there’s a contract stating so, and third parties are defined as entities that pay yields as a service.

Companies like Coinbase and Circle may need to adjust their agreements. The same goes for PayPal and Paxos, which issues PYUSD. There’s also ambiguity around the definition of “affiliate”—this proposal seems to create a third category based on ownership stake. If an issuer owns 25% or more of shares in a third party, they cannot offer yields. This could open loopholes for third parties without ownership issues.

What makes it even more complex is that stablecoin yields are also a key hurdle in the upcoming market structure bill that the crypto industry is waiting for. Some say this OCC proposal might mean Congress won’t need to address yields at all in the market structure bill. But others are confident Congress won’t overlook this issue so easily.

So in conclusion, it’s very likely that parts of the OCC proposal won’t be implemented as originally drafted. If the market structure bill becomes law before OCC finalizes its regulations, regulators will have to issue an interim proposal to stay compliant with the new law. This is a constantly evolving regulatory landscape, and the US stablecoin industry still faces a lot of uncertainty about the final direction of regulation.