Stablecoin Yields Defy Bans: Who Pays?

Stablecoin rewards, offering yields similar to interest on savings accounts, continue to be paid out following the CLARITY Act's failure in the Senate on September 15, 2026. This lack of legislative cap has not significantly boosted the stock prices of entities like Coinbase or Circle Internet Group.

The income for these stablecoin rewards originates from reserves held in U.S. Treasury bills and repurchase agreements. In Q2 2026, Circle reported $668 million in reserve income from an average of $76.5 billion in USD Coin (USDC) circulation, a 5% increase year-over-year. Coinbase also earned $292 million from stablecoins during the same quarter.

Banks advocate for restrictions, fearing that interest-bearing stablecoins divert deposits essential for loans. Consequently, the GENIUS Act, effective January 2027, will ban stablecoin issuers from paying interest. Previously, the CLARITY Act attempted a compromise, allowing rewards based on trading activities but banning issuer-paid interest mimicking bank deposits.

Despite the Federal Reserve's increased target rate, which benefits reserve income, it can also reduce risk appetite for crypto trading, a key revenue source for Coinbase. Circle faces competition under the GENIUS Act, and a legislative reprieve did not significantly lift its stock, while Coinbase remains impacted by both interest rate and trading volume dynamics.

As yield limits are currently eliminated, stablecoin rewards will continue for now, with Circle's reserve income remaining secure. However, the GENIUS Act's ban on issuer-paid interest looms, and regulatory bodies could challenge indirect payment structures. The American Bankers Association continues its lobbying efforts against these rewards.