The GENIUS Act, the federal law passed in 2025 that set up formal rules for U.S. stablecoin issuers, bans those issuers from paying interest or yield directly to people who hold their tokens,
The GENIUS Act, the federal law passed in 2025 that set up formal rules for U.S. stablecoin issuers, bans those issuers from paying interest or yield directly to people who hold their tokens, according to both CoinDesk and Forbes. What the law does not clearly settle is whether an exchange or other affiliate can pay a yield-like reward instead — and that unresolved gap is the entire fight now playing out between banks and crypto firms over the Clarity Act.
CoinDesk describes the GENIUS Act, formally the Guiding and Establishing National Innovation for U.S. Stablecoins Act, as the current law of the land on stablecoins and reports that it bans stablecoin issuers from offering yield to holders. Forbes puts it more precisely: the statute bars issuers of payment stablecoins from paying interest, or anything functioning like it, purely for holding the token. Neither outlet reports that GENIUS bans yield across the board. Forbes describes the open question the law left behind — whether affiliates or third parties could offer yield funded indirectly by the issuer — as the focal point of the congressional fight that followed.
The Office of the Comptroller of the Currency tried to answer that question with a proposed rule. Forbes reports the OCC’s 376-page proposed rule would treat yield paid by an affiliate or related party as though the issuer itself had paid it, applying what Forbes calls a “rebuttable presumption” — a default position an affiliate would have to argue against, rather than one crypto firms could simply assume didn’t apply to them. Forbes reports the comment period on that proposal had just closed as of its 7 May 2026 report, and that multiple banking groups had asked for an extension, arguing a compressed 60-day window made meaningful feedback difficult since three other regulators had issued their own GENIUS Act rule proposals on similarly tight timelines. No final rule from the OCC appears in the reporting reviewed here.
Separately, Senate negotiators tried to write the same distinction directly into the Clarity Act. Forbes reports that Sens. Thom Tillis and Angela Alsobrooks released proposed language, in early May 2026, that would bar stablecoin rewards structured to work like bank-deposit interest, while telling regulators to draft rules spelling out which reward activities are allowed. Forbes reports that transactions, payments, transfers and conversions appear to fall on the permitted side of that line, while passive holding does not.
Banking trade groups did not accept the compromise as final. CoinDesk quotes the American Bankers Association writing on its own website that how regulators handle “anti-evasion language” around indirect yield, including distribution-fee arrangements, “will determine how much daylight exists for issuer-affiliated rewards programs.” The ABA added, per CoinDesk, that concern the rules will not go far enough is exactly why it is pushing Congress to tighten the Clarity Act’s language further. Forbes separately reports that banking groups flagged what they called a loophole: as drafted, the language would still let exchanges pay interest or yield for participation in a membership program, so long as payments are not calculated or distributed like bank interest, and that permissible rewards could still be calculated by reference to duration, balance and tenure — incentives the groups argued would encourage idle holding.
Crypto-side lobbyists argue the question is already settled. CoinDesk reports that many crypto lobbyists in Washington consider the stablecoin rewards matter “locked” in the legislation and unlikely to be revised further. CoinDesk reports that view does not account for the fact that several Republican senators have broken from their party to warn they may oppose the Clarity Act without more bank-friendly changes — enough, per CoinDesk, that the bill may struggle to reach even a simple majority, let alone the 60 votes it needs.
CoinDesk’s 16 August 2026 report lays out the rate comparison at the center of the bank argument. A standard Chase retail savings account paid 0.01% as of that report, against more than 4% twenty years earlier, per CoinDesk. Inflation stood at 3.4%, per CoinDesk, meaning even Chase’s roughly 3.25% four-month certificate of deposit lost purchasing power in real terms. By contrast, CoinDesk reports stablecoin reward programs at Kraken and Gemini reaching 3.75% and above for certain participants, and Coinbase, the largest U.S. exchange, offering about 3.5%.
CoinDesk also reports the other side of the ledger: U.S. banking industry profit hit a record $80.5 billion in the first quarter of 2026, according to the FDIC’s quarterly banking profile, with a return-on-assets rate of 1.26% — among the highest levels in recent years, per CoinDesk. An unnamed banking-side source told CoinDesk that comparing today’s rates with those of twenty years ago ignores that the Federal Reserve’s fund rate was significantly higher back then and that overall interest expense today is higher once other costs are counted. Rashan Colbert, director of U.S. policy at the Crypto Council for Innovation, disputed the core premise that bank customers will actually shift into stablecoins, telling CoinDesk that shift “has not been found to be true, or even suggested by current stablecoin activity.”
Readers often take the GENIUS Act’s yield ban at face value and assume stablecoin rewards are already illegal everywhere. The law restricts issuers — companies like Circle that mint the tokens — from paying yield directly. It says far less about exchanges, which is why Coinbase, Kraken and Gemini have been able to run reward programs at all, per CoinDesk, and why the entire legislative fight now centers on whether the Clarity Act and OCC rulemaking will extend the ban to that affiliate channel too.
This page cannot report how the Clarity Act vote turns out. CoinDesk’s 16 August 2026 report says the fight is likely to be resolved when the bill gets its final three weeks of Senate action before the midterm elections. Separately, CoinDesk reports that bank lobbyists’ continued push may contribute to the bill’s failure if it does not find 60 Senate supporters by mid-September — a distinct threshold from the Senate-calendar point, and one whose outcome was not yet known as of that report.
The OCC’s final rule is also unresolved: Forbes reports the comment period closed in early May 2026, but no final rule appears anywhere in the sources reviewed here.
The comparative interest-rate and bank-profitability figures in this piece — the 0.01% savings rate, the 3.25% CD rate, the 3.4% inflation figure, the exchange reward rates, the $80.5 billion FDIC profit figure and the 1.26% return-on-assets — all trace to a single CoinDesk analysis published 16 August 2026. This page has not independently verified those numbers against a primary FDIC release or bank rate sheet, because neither was supplied as evidence.
Two additional outlets, PYMNTS and Crypto Economy, were reviewed for this page but are treated here as context-only republishers rather than corroborating newsrooms. Claims that appear only in them — including a reported industry letter signed by more than 125 companies, Sen. Elizabeth Warren’s alignment with bank lobbying groups, and quotes attributed to Coinbase’s and Kraken’s CEOs — are excluded from this page because they could not be confirmed against a primary source or a tier-1/tier-2 newsroom held in full.
Forbes reports that banking-industry-cited research suggests yield-bearing stablecoins could reduce consumer, small-business and farm lending by one-fifth or more, but does not name the study or its authors, so this page cannot evaluate that estimate. Finally, whether depositors would actually move from banks into stablecoins if the rules loosen remains a live dispute between the two sides in CoinDesk’s reporting, and no data in the evidence reviewed here settles it either way.
Every fact above is attributed to one of these reports. Where they disagree, the article says so.
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