Called 'reward' but actually interest?...Stablecoin yield products, will they be blocked in the US?

▲ Circle, USDC, Stablecoin, USD/ChatGPT generated image

As the sharp edge of US virtual asset regulation moves towards strictly distinguishing between simple holding yields of stablecoins and rewards for actual use, the market's product design methods are undergoing fundamental changes.

According to a report by the virtual asset specialized media BeInCrypto on May 6 (local time), US regulatory authorities and Congress have begun a full-scale review to clearly define the boundaries between passive yields of stablecoins and rewards based on platform activities. Stablecoin yield refers to a structure where users earn profits, similar to bank deposit interest, simply by holding tokens without any separate activity. Issuers or platforms have been returning a portion of the profits generated from operating reserves in US Treasury bonds or money market products to holders.

In contrast, stablecoin rewards are closely linked to actual platform activities such as payments, remittances, or exchange use. This is similar to traditional credit card cashback and is likely to be treated differently under regulation because it is paid as compensation for actual usage rather than interest on idle funds. The basis for this distinction was laid out in the GENIUS Stablecoin Regulation Act, which came into effect in July 2025, and this law strictly prohibited issuers such as Circle or Tether from directly paying interest to holders.

The current core of the debate is shifting to reward-based payment structures provided by exchanges or distribution partners, not issuers. Coinbase has been offering an annual yield of up to 4.1% on USD Coin (USDC) balances, but the banking sector strongly opposed this, defining it as a circumvention of the ban on direct payments by issuers. Accordingly, the compromise for the US cryptocurrency market structure bill proposed by Senator Thom Tillis and Senator Angela Alsobrooks in May 2026 included provisions to restrict rewards that are functionally identical to bank deposit interest.

Specific detailed regulations are expected to be finalized through a joint rulemaking process involving the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Department of the Treasury. According to the current direction of discussion, products that offer a fixed yield on idle balances are at high risk of being restricted, while on-chain payment bonuses or exchange loyalty rewards may be permitted. However, variable yield structures obtained through non-custodial DeFi lending protocols are analyzed to be outside the direct scope of this regulatory compromise.

As of early May 2026, the total market capitalization of the stablecoin market is approximately $323 billion, with Tether (USDT) accounting for 59% and USDC for 25% of the market share. As US regulatory authorities begin to scrutinize not only issuers but also the reward structures of exchanges, platforms are busy preparing countermeasures, such as repackaging existing yield products into activity-based reward forms. Users should carefully distinguish whether the profits they receive are simple holding rewards or predicated on actual usage conditions and adjust their investment strategies accordingly once official rules are finalized in the future.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*