The U.S. Office of the Comptroller of the Currency (OCC) urged community banks to review entering the market for issuing payment stablecoins.

Cointelegraph reported on Oct. 26 that the OCC encouraged community banks to expand their capabilities for payment stablecoins after finalising the Genius Act’s final rule.

The move came shortly after the OCC wrapped up the Genius Act’s final rule last week. The law is set to take effect in January 2027, raising the possibility that the stablecoin issuance market could broaden from existing crypto firms and large financial institutions to include community banks.

The market structure could also shift. If community banks with payment infrastructure and deposit bases participate as issuers, the competitive field around stablecoins could widen.

Still, pushback from the banking sector continues. Banking industry groups have raised issues with the OCC’s proposed rules related to stablecoin yields. Some argued the rules run counter to the Genius Act’s legislative intent. A key point is that the applicable regulations could differ if a structure that provides interest or returns on stablecoins is combined.

The community banking industry has also pursued legal action over the OCC’s chartering of crypto firms. Earlier this month, the Independent Community Bankers of America (ICBA) filed a lawsuit, arguing that crypto firms are gaining an advantage in competition without being subject to the same regulations as community banks.

Against this backdrop, the OCC’s message effectively presents community banks with two options at once. On one hand, it urged them to enter the stablecoin issuance market directly. On the other, it left unresolved the issue of regulatory parity with existing crypto firms. The OCC’s wording that "interested community banks are encouraged to consider applying to become, or for a subsidiary to become, a permitted payment stablecoin issuer, as applicable" is expected to serve as a benchmark for whether banks actually participate.

Key points to watch will be the scale of community bank participation and whether regulatory clashes persist. How many applications follow after the system takes effect in January, and how the regulatory imbalance raised by the community banking industry is resolved, remain variables in reshaping the U.S. stablecoin market.

The OCC wants community banks to help shape the future of payments and is encouraging the development of payment stablecoin capabilities within the community banking sector. Interested community banks are encouraged to consider applying to become, or for a subsidiary to become, a permitted payment stablecoin issuer, as applicable. These opportunities complement the OCC’s Community Bank Comeback initiatives to right-size regulation and tailor supervision so community banks can grow, compete, and continue serving their communities. https://t.co/e2YOVjynUN