ABA's Nichols says OCC's final stablecoin rule risks deposit flight

The American Bankers Association (ABA) publicly opposed the OCC's final stablecoin rewards rule within hours of its release on Wednesday, October 21. ABA CEO Rob Nichols said the rule's case-by-case approach to third-party rewards leaves a hole Congress did not intend, per The Block and the ABA Banking Journal's own write-up.

What Nichols said

In the ABA statement:

• "Those gaps risk undermining the distinction Congress drew between payment stablecoins and traditional bank deposits."
• "Attempting to address deposit flight and economic harm after it has occurred is the wrong approach."
• Acknowledgement that the ABA "appreciates" the OCC's recognition that "additional supervisory experience may inform future action in this area."

The ABA's core complaint: exchanges, wallets and other third parties can still offer rewards on payment stablecoins that issuers themselves are barred from paying — the loophole the association had asked the OCC to close in a May 2026 joint letter co-signed with 52 state bankers associations.

What the OCC changed in the final rule

The OCC's rule (release 2026-92, effective January 18, 2027 — see our earlier coverage) kept the direct ban on issuers paying interest on payment stablecoins, but dropped the proposal's rebuttable presumption that an issuer violated the ban when it arranged third-party rewards through an affiliate, exchange or distribution partner.

Instead, the OCC said in the preamble: "Because payment stablecoins are a nascent market, the OCC does not believe that it is appropriate to impose a rebuttable presumption with respect to the yield prohibition at this time." A senior official told reporters on a Tuesday call that arrangements will be reviewed case-by-case, per American Banker.

The named programmes in the air: Coinbase's USDC rewards and PayPal's PYUSD rewards. Neither is pre-empted; both remain reviewable.

The deposit-flight argument

Nichols's framing in May 2026, before the Senate Banking Committee vote on an earlier version of the rule: "The current proposal would unnecessarily incentivize the flight of bank deposits into payment stablecoins." The October statement treats the final rule as the realisation of exactly that risk — now in rulemaking, not statute.

Three concrete positions the ABA holds across its 2026 letters:

1. A broad presumption that any affiliate or related-party arrangement paying yield to stablecoin holders is an evasion of the ban.
2. Equal treatment across national banks and non-bank issuers under BSA and sanctions compliance.
3. Pause on further crypto-related bank charter approvals pending a complete federal framework.

The OCC's final rule picks up (2) in substance via a separate rulemaking later this cycle — BSA/AML/OFAC are not in the OCC's own final rule and will come through a joint Treasury process — but drops (1).

Other reactions

• Treasury Secretary Scott Bessent called the rule "a clear, practical foundation for private-sector innovation, competition, and American leadership in digital assets," per BankingDive.
• Americans for Financial Reform called the rule weak and said it caves to crypto industry demands, in a release the same day.

What to watch

1. The first OCC determination on a specific third-party rewards programme. With the bright-line test gone, the first case-by-case ruling against Coinbase USDC or PayPal PYUSD rewards would set the template.
2. The Federal Reserve's own GENIUS Act proposal — comment period closes November 30. The Fed proposal still carries a similar third-party presumption. A diverging Fed outcome would hand the ABA its wedge.
3. Any congressional response. Nichols' "undermining Congress" framing is calibrated for a legislative fix. Watch Senate Banking members who supported the GENIUS Act's deposit-protection language.
4. The joint Treasury AML rulemaking. Issuers are stuck in a split framework — OCC on prudential, Treasury on BSA — until the second rule lands.

Context

The OCC's rule is the first federal agency rulemaking under the GENIUS Act, signed by President Trump on July 18, 2025. The statute takes effect January 18, 2027, the same day as the OCC rule. Three more agencies — the Fed, FinCEN and OFAC — still have to publish their own rules before the GENIUS compliance stack is complete. The ABA's October statement is the opening salvo for the next 90 days.

Prior coverage: the OCC final rule, and the SEC Regulation Crypto Assets comment-period close with two of five commissioners seated.