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The OCC's Stablecoin Rule Drew the Line Between a Token and a Deposit. SoFi Crossed It the Next Day.

How the OCC's final GENIUS Act rule (91 FR 67000) exempts tokenized deposits from the yield ban, why the FDIC guards the line, and how SoFi Earn exploits it.

By Lex, LexRegPulse Analyst · ·10 min read
Primary-source research · AI-drafted · human-reviewed. Methodology

On October 21 the OCC issued its final rule implementing the GENIUS Act. It is the first final rule from any of the four primary federal payment stablecoin regulators (the Federal Reserve, FDIC, NCUA and OCC). On October 22, SoFi began rolling out SoFi Earn (SOFIE), a tokenized deposit paying a variable 4.40% APY that converts 1:1 into SoFiUSD, the bank's payment stablecoin. Coverage read the rule as a reserves-and-redemption rule. The provision that will move money sits in the preamble's yield discussion: "The OCC confirms that the GENIUS Act's yield prohibition does not apply to deposits," including "deposits in tokenized form."

Add the OCC's decision to drop its proposed presumption against affiliate and third-party rewards. The resulting asymmetry is the whole game. A chartered bank can pay interest on a dollar token it books as a deposit. A permitted payment stablecoin issuer cannot pay a holder for holding its coin after January 18, 2027. SoFi built one product on each side of that line and put a conversion button between them. The obvious question is what stops every issuer from restructuring onto the deposit side. Part 15 doesn't answer it. The answer is the charter, and the agency that guards the word "deposit" is the FDIC.

Congress drew the line. The OCC declined to redraw it.

The deposit carve-out is statutory. Section 2(22) of the Act (12 U.S.C. 5901(22)) excludes from "payment stablecoin" any deposit as defined in 12 U.S.C. 1813, "including a deposit recorded using distributed ledger technology." The OCC adopted that definition in § 15.2 as proposed. Commenters asked for a sharper boundary with tokenized deposits. The OCC declined, saying the definition "appropriately and clearly excludes deposits, including deposits in tokenized form." Section 15.2 defines "deposit" by cross-reference to 12 U.S.C. 1813(l).

That refusal matters more than any reserve ratio in the rule. The OCC did not build a test for when a tokenized deposit stops being a deposit. It left the question to the Federal Deposit Insurance Act, which the FDIC administers. The new definition of "tokenized form" governs reserve assets, not deposits. Its demand that legal rights be "identical" to the untokenized asset is the closest thing in part 15 to a functional test.

The rule ran 643 pages on public inspection and was published October 23 at 91 FR 67000 as FR Doc. 2026-21706. It takes effect January 18, 2027, the statute's own effective date. The Federal Reserve's proposal (91 FR 61580) takes comments until November 30. The FDIC's proposal (91 FR 18534) was still open when Chairman Travis Hill spoke on October 14. The NCUA's proposal, at 91 FR 28956, is not final. We covered SoFi's card-settlement move in "The Token in the Settlement Leg" on September 30. Our briefs of October 22 and October 23 covered both.

What "case by case" means for a rewards program

The proposal would have presumed a violation whenever an issuer paid an affiliate or "related third party" that in turn paid holders, rebuttable only by a written showing. Final § 15.10(c)(4) keeps just the statutory bar on paying holders interest or yield "solely in connection with the holding, use, or retention" of the coin.

The comment file split cleanly. One camp argued the statute reaches issuers only, noting that section 4(a)(11), unlike the rehypothecation ban in section 4(a)(2), says nothing about "directly or indirectly." The other camp wanted a broader presumption or a flat ban, citing deposit-flight estimates in the trillions and the risk to community-bank lending. The OCC found the presumption "could have been both overinclusive and underinclusive." It will instead monitor arrangements "as part of its review of issuers' applications and ongoing supervision." It kept its anti-evasion authority under section 4(h)(1). A clarifying rule may follow once it has experience.

Do not read the deletion as permission. The OCC refused every safe harbor requested: de minimis payments, pre-Act rewards programs, DeFi, securities, white-label partners. An agent's payment on the issuer's behalf is the issuer's payment. "Interest does not stop being interest merely because it is given a different name." Payments for bona fide services generally fall outside the ban, as may payments made "at least in part, for other reasons."

Operationally, the application file is now the venue. Anyone designing rewards should document who funds the payment, who decides to pay it, and whether the benefit scales with balance or holding period. Commenters on both sides treated scaling as the tell of interest. White-label structures carry the most risk; the OCC said those payments are more likely to be made on the issuer's behalf. Expect examiners to ask for this file before approval, not after launch.

The awkward part for anyone planning across charters: the Federal Reserve's September proposal copied the OCC's original presumption. As things stand, a Fed-supervised issuer faces a presumption the OCC has abandoned.

The funding-flow consequence

SoFi's disclosures state each side precisely. SOFIE "is a tokenized deposit representing a deposit liability of SoFi Bank, N.A.," and "is not a payment stablecoin." SoFiUSD "is not a deposit, is not insured by FDIC or SIPC." As SoFi describes the product, the on-chain leg runs on SoFiUSD. A member who wants to buy crypto or send funds to an external wallet converts first.

Follow a dollar through the conversion. It starts as an insured retail deposit, among the stickiest funding a bank has. It ends as an issuer liability backed by reserves. Final § 15.11(c)(2) requires at least 5% of reserves in demand deposits or a Federal Reserve account. It caps exposure to any one counterparty at 40% of reserves. The OCC confirmed a bank may deploy deposits it receives from an issuer, so some reserve cash can sit at the parent. On our reading, that deposit is a counterparty exposure; the § 15.11(d) carve-out covers assets in custody, which a deposit is not. At most four-tenths of a converted balance comes back, as a wholesale deposit from an affiliate. The rest goes to Treasury bills or other banks.

Read that way, SOFIE is less a crypto product than a deposit-retention product. SoFi pays 4.40% to keep dollars on the balance sheet until they must move. The conversion is the leak, and the product exists to delay it. Any bank with crypto customers can copy the design.

Nonbank issuers cannot. Comptroller Gould said on October 27 that the rule "applies the same standards to bank and nonbank issuers." True at the issuer level. The field tilts one level up, where only a bank parent can book a deposit. A nonbank federal qualified issuer has no deposit side, and its partners' rewards must survive case-by-case review. A national trust charter doesn't help. Ripple National Trust Bank, which holds final OCC approval as our October 28 brief covered, will take no deposits. The only route to the deposit side runs through a full-service insured charter. That is the moat. Expect the next issuer charter filings to seek deposit insurance, not trust powers.

ABA chief Rob Nichols said the yield gaps "risk undermining the distinction Congress drew between payment stablecoins and traditional bank deposits." What this misses is that the same distinction lets a bank pay yield on a token. Banks benefit from the line the ABA wants defended; the real complaint is about third-party rewards.

What the customer gives up at the button

At conversion, the customer gives up deposit insurance, the interest rate and a depositor's place in a bank receivership. In exchange the customer gets par redemption within two business days under § 15.12(c)(1), segregated reserves and the Act's priority for holders against them.

New § 15.12(e)(1)(vi) requires issuers to state that payment stablecoins "are not deposits" and carry neither FDIC deposit insurance nor NCUA share insurance. The statement goes on the website and into customer agreements. Nothing in part 15 puts it at the moment of conversion. The sharper constraint is § 15.10(c)(3). It bars an issuer from representing, "directly or through implication," that payment stablecoins are subject to federal deposit insurance. SoFi's headline pairs "FDIC insurance" with the ability to "move them 24/7 through SoFiUSD." SoFi's disclosures are careful. Still, an app screen pairing an insurance badge with a stablecoin transfer is where "through implication" gets tested. The Fed's proposal says misrepresentations "cannot be cured by a general disclaimer."

The rest of the rule, briefly

Most of the changes from the March proposal (91 FR 10202) ease burden:

Three changes tighten. The $5 million capital floor now outlasts the de novo period. Capital and backstop compliance runs "at all times," not at quarter-end. Reserves must support redemption under adverse conditions, with a buffer if needed.

What to watch

The January 18 bridge is narrower than it looks. Bulletin 2026-51 says the OCC generally expects to waive the prior-approval requirement for "existing issuers currently operating in the United States" with a substantially complete application pending. It sees no reason to waive anything else, since issuers "have had 18 months," and none for issuers not yet operating. Applications open only after OMB approves the forms, and comments on those forms close November 23. The OCC then has 30 days to rule on completeness.

Final § 15.30(g) lets the OCC waive "the requirements of the GENIUS Act," closing the section 3 gap we flagged on September 30. But the waiver runs to the bank's subsidiary, while SoFiUSD is still issued by SoFi Bank, N.A. Whether a subsidiary that has never issued counts as "currently operating" is a question for every bank issuing off its own balance sheet to put to its examiner now.

The Fed's November 30 deadline decides whether the presumption survives at one regulator after dying at another. The FDIC's final rule decides the deposit side. Its April proposal would "reaffirm by regulation that deposits in tokenized form remain deposits." On October 14, Hill said the FDIC will "have more work to do after this rulemaking no matter what." He flagged 24-hour settlement as a resolution problem: "there basically is no end of the day on Friday." Any later OCC yield rule gets no Chevron deference under Loper Bright Enterprises v. Raimondo (2024). Building a supervisory record first is the defensible sequence.

For general counsel and CCOs with a tokenized-dollar product:

Bottom line

The OCC drew nothing new on October 21. It refused to redraw the line Congress drew, and that refusal turns the GENIUS Act's yield ban from a product rule into a charter rule. Yield on a digital dollar now belongs to whoever can book it as an insured deposit. SoFi understood that within a day. The next fight is not over rewards programs at the OCC. It is over the FDIC's definition of a deposit, and how far a token can travel before it stops being one.

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