What is a yield-bearing stablecoin?

A yield-bearing stablecoin is a token that aims to hold a steady value, usually one US dollar, while also earning its holder a return. Common stablecoins such as USDC and USDT keep the income from their reserves and pay holders nothing. Yield-bearing versions pass some of that income, or income from riskier strategies, on to holders.

How does stablecoin yield work?

Most yield-bearing stablecoins work like a vault. A holder deposits a regular stablecoin and receives a second token in return. Over time, each vault token can be redeemed for more of the original stablecoin than was put in.

Two examples show the range:

• sUSDS. Holders of Sky's USDS stablecoin can deposit it to get sUSDS, which earns the Sky Savings Rate. Sky's documents say the deposit and withdrawal route has no fees.
• sUSDe. Holders of Ethena's USDe can stake it to get sUSDe, whose value in USDe rises as rewards are added. Those rewards come mainly from futures funding payments and other strategies, as explained in what Ethena and USDe are.

Because the extra return comes from lending, trading or holding other assets, these tokens carry more risk than a plain reserve-backed coin. A rate shown today can fall or stop, and Ethena says rewards are typically not paid during periods of negative revenue.

What is stablecoin yield, and where does it come from?

The yield is whatever the backing earns, minus what the issuer keeps. The usual sources are:

• interest on short-term government debt, often held as tokenized Treasury bills,
• interest from borrowers in crypto lending markets,
• payments from futures positions, as in Ethena's design.

The first source is the least volatile. The others depend on crypto markets staying active and on counterparties staying solvent. None of these tokens is a bank deposit.

Does the GENIUS Act ban stablecoin interest?

Partly. The GENIUS Act, signed on July 18, 2025, says a permitted payment stablecoin issuer may not pay holders any form of interest or yield, in cash, tokens or anything else, solely for holding, using or keeping the coin.

The same law says a security is not a payment stablecoin. So a dollar-pegged token that pays yield may fall outside the payment stablecoin rules altogether and could be treated under securities or other laws instead.

The ban also leaves open questions. In September 2025, the Treasury asked the public whether the ban covers indirect payments, such as rewards paid by an exchange or an affiliate, and what words like "interest," "yield" and "solely" mean. Treasury's proposed rules on who may offer stablecoins in the US were open for comment until October 19, 2026.

For other ways holders earn returns, see does crypto pay interest or dividends.

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