The debate over stablecoin yield has moved from trading desks to Capitol Hill as industry leaders and banks clash over how the new U.S. framework should treat interest on crypto-native dollars. Will Beeson, CEO of Multiliquid and former head of tokenized asset infrastructure at Standard Chartered, told Decrypt that the ability to offer yield is a key competitive tool for stablecoin issuers.
The GENIUS Act, signed into law in July, creates the first formal U.S. rules for issuing and trading stablecoins. Crucially, the law bars stablecoin issuers from paying interest directly to holders, but it does not explicitly prohibit third parties—such as centralized exchanges or platforms—from offering rewards or interest on stablecoin balances. For example, Coinbase pays interest to customers on USDC balances held on its platform, effectively creating yield through an intermediary.
Banks and traditional financial trade groups have pushed to remove that opening. In an August 12 letter, the Bank Policy Institute and other organizations warned lawmakers that leaving third-party channels intact could enable an exodus of deposits worth as much as $6.6 trillion from the U.S. banking system, increasing deposit flight risk and potentially reducing credit supply across the economy.
Crypto trade groups pushed back on August 20. The Blockchain Association and the Crypto Council for Innovation said the $6.6 trillion figure is overstated and argued that permitting regulated platforms to share yield with users promotes financial inclusion and helps U.S. firms remain competitive globally.
Beeson noted the political reality: expectations for a rapid fix are limited, with lawmakers unlikely to move quickly on narrowing the law’s language. That means firms must plan for a landscape where issuers cannot pay directly but intermediaries may offer incentives—introducing compliance complexities and operational risk.
What to watch next: regulatory guidance on third-party offerings, enforcement signals from banking and financial regulators, and how major exchanges structure yield products. Readers should note that changes could affect corporate treasuries, consumer protections, and liquidity in both crypto and traditional banking markets.
Source: Decrypt. Read the original coverage for full details.