The agency — an independent bureau of the Treasury Department — has declined to offer examples or illustrations of what type of rewards operations may run afoul of the $GENIUS Act, which declared that payments to customers made “solely in connection with the holding, use, or retention of such payment stablecoin” won’t be allowed. The industry, which won’t get any safe harbors for existing programs, will just have to test the agency’s case-by-case oversight to get a better sense of the rule, which is set to go live on January 18.
The regulator said it “will apply the language of the statute to the facts and circumstances of any particular arrangement.” However, the agency did suggest that the word “solely” in the prohibition is carrying a lot of weight, and that a reward that “might be made, at least in part, for other reasons” would fall outside the ban in the $GENIUS Act.
Payment stablecoins hew to the value of the U.S. dollar and are designed — as suggested by the name — to maintain a steady value in a crypto industry in which other assets are known to be famously volatile. The sector is currently led by Tether’s USDT and Circle’s USDC, but a number of entrants have begun crowding into the space.
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