| Article | Published |
|---|---|
| Stablecoin Yield and the New Regulatory BoundaryStablecoin regulation has largely focused on making sure issuers can meet redemptions and that the assets backing their tokens are safe. Regulators are now turning to a more complicated question: should stablecoin holders be able to earn a return on those balances? Europe already restricts interest payments under MiCA and is considering how those rules should apply when stablecoins are used in lending, staking, and DeFi. The United States faces a similar debate. The GENIUS Act bars issuers from paying yield directly, while an effort to set boundaries around third-party rewards through the CLARITY Act stalled in the Senate. The debate matters because yield changes how people use stablecoins. Once they can generate a return, they begin competing more directly with bank deposits and other savings products. That raises broader questions about bank funding, the investment of stablecoin reserves, and who ultimately receives the income those reserves generate. | 20 min |
| Stablecoins and the Treasury TwistThe U.S. Treasury's decision in August to increase purchases of long-dated government bonds was small in dollar terms. The policy implications are harder to dismiss. Treasury is becoming more active at the long end of the government bond market just as another major policy shift is creating a potentially large and structurally different class of buyers at the opposite end of the curve: regulated stablecoin issuers. This is not yield curve control, and there is no evidence of coordination. But the structure of U.S. public debt increasingly matters for stablecoins, and the structure of stablecoins may increasingly matter for U.S. public debt. | 20 min |
| Stablecoin Yield and the New Deposit WarBank of America's Brian Moynihan warns that yield-bearing stablecoins could pull up to $6 trillion out of bank deposits, threatening deposit-funded lending. But deposits do not leave the financial system; they are reallocated into reserves, Treasury bills, repo, and money market funds. A White House analysis finds a yield ban would lift bank lending by only ~0.02 percent while costing savers, and IMF research points to the Treasury market, not deposit drain, as the more important channel. The real fight is over who captures the economics of digital cash, and the better answer is safe competition under strict prudential rules rather than a blunt yield prohibition. | 20 min |