Can stablecoins pay interest?

Stablecoins regulated under US law cannot pay interest just for holding them, but that is not the whole answer. The GENIUS Act bans the issuer from paying yield, while other companies that hold or distribute the coins sit in a grey area. How the law works overall is covered in what is the GENIUS Act.

What does the GENIUS Act say about stablecoin interest?

Section 4(a)(11) says no permitted payment stablecoin issuer or foreign payment stablecoin issuer may pay a holder any form of interest or yield, whether in cash, tokens or other consideration, solely in connection with holding, using or retaining the stablecoin.

Two details matter. First, the ban targets issuers, not everyone in the chain. Second, the word "solely" leaves room for payments tied to something other than simple holding. The law also says a token that is a security is not a payment stablecoin, so a yield-paying dollar token may be regulated as something else, as explained in what is a yield-bearing stablecoin. The law and the OCC's final rule take effect on January 18, 2027.

What is the stablecoin yield loophole?

The loophole is the gap between the issuer and the platform. An exchange that holds a stablecoin for customers is not the issuer, so the statute's wording does not clearly stop it from paying customers rewards on their balances. Banks argue this lets stablecoins compete with interest-bearing deposits.

Regulators are working on it. In September 2025, Treasury asked the public whether its rules should define "pay," "interest," "yield" and "solely," and whether, and to what extent, indirect payments are banned.

The OCC went further in its March 2026 proposal. It said issuers might try to pass yield to holders through third parties, and proposed a rebuttable presumption: if an issuer pays an affiliate or related third party, and that party pays yield to the issuer's holders, the issuer is presumed to be breaking the ban unless it shows otherwise. The OCC said merchant discounts for paying in stablecoins, and profit sharing with an unaffiliated white-label partner, are not meant to be caught. It issued its final rule on October 21, 2026.

How would the CLARITY Act have handled stablecoin rewards?

The Senate Banking Committee's May 2026 draft of the market-structure bill took aim at platforms. Galaxy Research says it would have barred digital asset service providers and their affiliates from paying anything on a stablecoin balance that is economically or functionally equivalent to deposit interest.

It would still have allowed rewards for bona fide activity, such as payments, staking, governance voting or loyalty programs, even if calculated by balance or duration. Large bank trade groups rejected that compromise as too loose.

The bill then stalled. On September 15, 2026, a Senate motion to begin debate failed 49 to 50, short of the 60 votes needed. The background is in what is the CLARITY Act. As of November 2026, rewards paid by platforms rather than issuers are not settled by any statute written for them.

Rules differ by country and change often. Check the regulator or a qualified professional for your own situation.