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Last updated: July 22, 2026

Where Does Stablecoin Yield Actually Come From? (2026)

Stablecoin issuers are banned from paying yield under the GENIUS Act, signed July 18, 2025. So where does 4 to 10 percent stablecoin yield come from? A dated, primary sourced map of every yield source, who bears the risk, and what failed before.

Educational content only. This page is not financial, legal, or tax advice. It is an index of public records. All figures are dated in the text; verify every claim against the dated primary source before acting on it.

The short version, stated plainly

A dollar sitting still does not produce 4 to 10 percent a year. A 3 month US Treasury bill yielded about 4.3 percent in mid July 2025 and roughly 3.6 percent by early January 2026, after the Federal Reserve cut its policy rate three times in late 2025, on September 17, October 29, and December 10, 2025, per the Federal Reserve's FOMC statements; bill yields per the US Treasury's daily par yield curve. Any stablecoin yield above the T-bill rate is payment for a risk someone is asking you to carry. The rest of this page identifies which risk, who carries it, and what has already failed.

And since July 18, 2025, there is a second fact that most yield marketing does not lead with: under US federal law, the issuer of a regulated payment stablecoin is not allowed to pay you interest at all.

1. The GENIUS Act banned issuer yield. The yield you see survives through side doors.

  • On July 18, 2025, President Trump signed the GENIUS Act (S. 1582, the Guiding and Establishing National Innovation for U.S. Stablecoins Act) into law as Public Law 119-27. The Senate passed it 68-30 on June 17, 2025; the House passed it 308-122 on July 17, 2025 (Congress.gov, S. 1582, 119th Congress).
  • Section 4(a)(11) of the Act prohibits a permitted payment stablecoin issuer from paying holders "any form of interest or yield (whether in cash, tokens, or other consideration)" solely in connection with holding, using, or retaining the stablecoin (Public Law 119-27, Sec. 4(a)(11)).
  • The ban applies to the issuer. It does not, on its face, reach an exchange, broker, or affiliate that pays "rewards" on stablecoins it holds for customers. That gap is why yield offers did not disappear after July 2025:
    • Coinbase is not the issuer of USDC (Circle is), and it continued paying "USDC rewards" after the Act was signed. Circle's S-1 registration statement, filed with the SEC on April 1, 2025, disclosed roughly 1.0 billion dollars in distribution and transaction costs in 2024, most of it revenue sharing with Coinbase under an agreement that splits residual reserve income (Circle Internet Group S-1, SEC EDGAR, April 1, 2025).
    • On December 15, 2025, Coinbase stopped paying USDC rewards to non subscribers entirely and limited the program to paid Coinbase One members at 3.5 percent, down from 4 percent in October 2025, citing falling interest rates (DL News, December 11, 2025). Note what that demonstrates: the "yield" was a discretionary marketing program, repriced and paywalled unilaterally, not interest you were owed.
    • PayPal announced a rewards program on its PYUSD stablecoin at 3.7 percent annually in April 2025 (PayPal announcement, April 23, 2025), also structured as rewards rather than issuer paid interest.
    • DeFi yield (Aave, Morpho, Curve, Ethena, and similar) is untouched by the Act's Section 4(a)(11), because no permitted issuer is paying it.
  • Regulators have noticed the side doors. The OCC issued a notice of proposed rulemaking to implement the GENIUS Act on February 25, 2026 (OCC Bulletin 2026-3), and law firm analyses of the proposal describe it as addressing how the interest and yield prohibition applies, including arrangements involving rewards (Perkins Coie client update, 2026; Paul Hastings, 2026). The FDIC published its own companion proposal in the Federal Register on April 10, 2026 (91 FR, Docket RIN 3064-AG12, "GENIUS Act Requirements and Standards"). As of this page's July 22, 2026 update, these are proposals, not final rules. Whether the rewards route stays open is an open regulatory question, which is itself a risk to any yield offer built on it.
  • One more thing the GENIUS Act does: it prohibits marketing a payment stablecoin as legal tender, as issued by the US government, or as federally insured (Public Law 119-27, Sec. 4). If a yield pitch implies government backing, it is describing something the law forbids the issuer to claim.

The Act's core issuer provisions take effect on the earlier of 18 months after enactment (January 18, 2027) or 120 days after primary federal regulators issue final implementing regulations (Public Law 119-27, effective date provision). So in July 2026 the market is in a transition window: the law is signed, the rules are drafts, and yield marketing lives in the gap.

2. The map: where "stablecoin yield" actually comes from

Scroll the table sideways on a phone to see the full row. Source citations are dated in the last column.

Five yield sources, where the money actually comes from, who bears the risk, what fails first, whether the GENIUS Act reaches it, and the dated receipt.
Yield source Where the money actually comes from Who bears the risk What fails first in a stress event GENIUS Act protection? Receipt (dated)
CeFi lending programs (Celsius, BlockFi, Voyager, Gemini Earn model) Your coins are lent to trading firms and used in the platform's own bets; borrowers' interest funds your rate. You. You are typically an unsecured creditor of the platform. Withdrawals freeze first, then bankruptcy. Recovery takes years and is partial. Outside. These are custodial lending accounts, not issuer reserves. Celsius froze all withdrawals June 12, 2022 and filed Chapter 11 on July 13, 2022 owing roughly 4.7 billion dollars to users (SDNY bankruptcy filing). BlockFi paid a 100 million dollar SEC and state settlement February 14, 2022 for its unregistered interest accounts, then filed Chapter 11 November 28, 2022.
DeFi lending and liquidity pools (Aave, Compound, Curve, Morpho) Borrowers pay variable interest to leverage up; traders pay swap fees to LPs; sometimes token emissions subsidize the rate. You, via the smart contract and the collateral it holds. Exploits and oracle failures drain funds instantly; in a crunch, utilization spikes and you cannot withdraw until borrowers repay. Outside. No issuer, no GENIUS coverage. Euler Finance was drained of 197 million dollars in a flash loan exploit on March 13, 2023 (Euler disclosure; funds later largely returned in April 2023). Curve pools lost roughly 70 million dollars to a Vyper compiler reentrancy bug on July 30, 2023.
T-bill reserve pass through "rewards" (USDC rewards, PYUSD rewards) Interest earned on the issuer's Treasury bill reserves, shared with a distribution platform, paid to you as discretionary "rewards." You bear platform custody risk and program risk; the rate is not contractual interest. The program gets cut or paywalled when rates fall; the platform's terms let it change the rate at will. Adjacent. The issuer's reserves are regulated; the reward paid by the platform is not issuer interest, by design. Coinbase cut USDC rewards for all non subscribers effective December 15, 2025, keeping 3.5 percent for paid Coinbase One members only, after Fed cuts (DL News, December 11, 2025).
The affiliate / "rewards" loophole (exchange pays what the issuer legally cannot) Revenue sharing between issuer and platform: Circle's S-1 (April 1, 2025) shows roughly 1.0 billion dollars of 2024 reserve income paid out as distribution costs, mostly to Coinbase. You, plus regulatory risk: proposed OCC rules (NPRM, February 25, 2026) address how the yield ban applies to rewards arrangements. Regulators close the loophole, or the platform freezes withdrawals; Gemini Earn users waited roughly 19 months (November 16, 2022 freeze to mid 2024 recovery). Explicitly around it. Sec. 4(a)(11) binds issuers; this structure exists because it does not bind platforms, so far. SEC charged Genesis and Gemini on January 12, 2023 over the Gemini Earn program as an unregistered securities offering (SEC press release 2023-7); Genesis filed Chapter 11 January 19, 2023.
Staking adjacent and synthetic dollar yield (Anchor's 19.5 percent, Ethena style basis trades, staking rewards) Token emissions and subsidies, perpetual futures funding rates, or staking rewards passed through a dollar pegged wrapper. You, via the peg mechanism, the hedge counterparties, and the subsidy running out. The subsidy or funding rate flips negative, the peg breaks, and losses are total, not partial. Outside. Algorithmic and synthetic structures are not permitted payment stablecoins under the Act. Anchor Protocol advertised roughly 19.5 percent on UST; its yield reserve needed a 450 million dollar top up in February 2022 (Luna Foundation Guard); UST depegged May 7 to 13, 2022, erasing roughly 40 billion dollars (SEC v. Terraform, complaint filed February 16, 2023). Kraken paid 30 million dollars and shut its US staking service, February 9, 2023 (SEC).

Read the table disconfirmingly: in every row, the honest question is not "what is the APY" but "which cell in column four am I signing up for."

3. FAQ

Is stablecoin yield safe?

No yield above the dated Treasury bill rate is "safe" in the FDIC insured sense, and most stablecoin yield carries risks that have already produced total or multi year losses. Celsius (withdrawals frozen June 12, 2022), BlockFi (Chapter 11, November 28, 2022), Voyager (Chapter 11, July 5, 2022), Genesis and Gemini Earn (frozen November 16, 2022), and Anchor and UST (collapsed May 2022) were all marketed as safe places to earn on dollars or dollar pegged assets. The safest available comparison, a 3 month T-bill, paid about 4.3 percent in July 2025 and about 3.6 percent in early January 2026 (US Treasury daily par yield curve). Yield above that is compensation for risk, full stop.

Is stablecoin yield FDIC insured?

No. FDIC deposit insurance covers deposits at insured banks when the bank fails. It does not cover crypto assets, stablecoins, or losses when a crypto platform fails, and the FDIC said so explicitly in a public fact sheet dated July 28, 2022. On the same day, the FDIC and the Federal Reserve jointly ordered bankrupt lender Voyager Digital to stop telling customers their funds were FDIC insured (FDIC and Federal Reserve joint letter, July 28, 2022). The GENIUS Act now also prohibits issuers from marketing stablecoins as federally insured (Public Law 119-27, signed July 18, 2025). SIPC coverage does not apply either; SIPC has stated it does not protect crypto assets.

If issuers cannot pay interest, why is my exchange paying me 3 to 4 percent on USDC?

Because your exchange is not the issuer. The GENIUS Act's Section 4(a)(11) ban applies to permitted payment stablecoin issuers (Circle, for USDC). Coinbase pays "rewards" funded through a revenue sharing agreement with Circle; Circle's April 1, 2025 S-1 disclosed roughly 1.0 billion dollars in 2024 distribution and transaction costs, most flowing to Coinbase. This is the "rewards loophole." Two things to know about it: the rate is discretionary (Coinbase cut it to paid subscribers only on December 15, 2025), and regulators are actively reviewing it (OCC proposed rulemaking, February 25, 2026; FDIC proposal, Federal Register, April 10, 2026).

What exactly is the rewards loophole?

A structural workaround: the law bans the issuer from paying yield "solely in connection with holding" the coin, so the yield is paid instead by a distribution partner, an exchange or wallet, out of the issuer's shared reserve income, and labeled "rewards" rather than interest. Economically you receive a slice of T-bill interest on the reserves. Legally you receive a revocable marketing perk from a platform, with no contractual right to it and no GENIUS Act issuer obligations attached to the payment.

What happened to Celsius, and when?

Celsius Network marketed yields of up to 17 percent APY. It froze all customer withdrawals on June 12, 2022 and filed for Chapter 11 bankruptcy on July 13, 2022 with a roughly 1.2 billion dollar hole in its balance sheet (first day filings, SDNY). On July 13, 2023, the SEC, CFTC, FTC, and DOJ all brought actions against Celsius and founder Alex Mashinsky. Mashinsky pleaded guilty to fraud on December 3, 2024 and was sentenced to 12 years in prison on May 8, 2025 (DOJ, SDNY).

What happened to BlockFi, and when?

BlockFi offered up to 9.25 percent on its BlockFi Interest Account. On February 14, 2022, it agreed to pay 100 million dollars (50 million to the SEC, 50 million to state regulators) for failing to register the accounts as securities, the SEC's first case against a crypto lending platform (SEC press release 2022-26). After the FTX collapse, BlockFi halted withdrawals on November 10, 2022 and filed Chapter 11 on November 28, 2022.

What happened to Anchor and UST, and when?

Anchor Protocol paid a subsidized roughly 19.5 percent "stable" rate on TerraUSD (UST), an algorithmic stablecoin. The subsidy was visibly unsustainable: the Luna Foundation Guard injected 450 million dollars into Anchor's depleting yield reserve in February 2022. UST lost its dollar peg beginning May 7, 2022 and collapsed within a week, destroying roughly 40 billion dollars of market value (SEC v. Terraform Labs and Do Kwon, complaint filed February 16, 2023). A jury found Terraform and Kwon liable for fraud on April 5, 2024; Terraform agreed to a roughly 4.5 billion dollar judgment in June 2024. Kwon pleaded guilty to US fraud charges on August 12, 2025 (DOJ, SDNY) and was sentenced to 15 years in prison in December 2025 (DOJ, SDNY).

Can a stablecoin itself depeg, even a "fully backed" one?

Yes, and the largest ones already have, briefly. USDC traded as low as roughly 0.88 dollars on March 11, 2023 after Circle disclosed that 3.3 billion dollars of its roughly 40 billion dollar reserve was stuck at the failed Silicon Valley Bank; the peg recovered after federal regulators guaranteed SVB deposits on March 12, 2023 (Circle disclosures, March 10 to 13, 2023). Tether's USDT briefly traded near 0.95 dollars on May 12, 2022 during the UST panic (CoinGecko market data, May 12, 2022). The GENIUS Act's reserve rules (1 to 1 backing in cash, insured deposits, T-bills of 93 days or less, and similar assets, with monthly public reserve disclosures) are designed to reduce this risk for permitted issuers, but they were not yet fully in effect as of July 2026.

Is a stablecoin yield product a security?

Regulators have repeatedly said yes when yield is involved. The SEC's February 14, 2022 BlockFi order treated crypto interest accounts as unregistered securities. The SEC charged Genesis and Gemini over Gemini Earn on January 12, 2023 on the same theory, and settled with Kraken over staking as a service for 30 million dollars on February 9, 2023. By contrast, SEC staff stated on April 4, 2025 that certain fully reserved, non yield bearing "covered stablecoins" are not securities (SEC Division of Corporation Finance statement, April 4, 2025). The pattern in the public record: the coin alone may not be a security; the yield wrapper around it is where enforcement has landed.

Does the GENIUS Act protect me if my exchange fails?

Not for custody failures. The Act regulates issuers: reserve composition, monthly disclosures, and priority for stablecoin holders' claims on reserves in an issuer insolvency (Public Law 119-27). If the exchange or app holding your stablecoins fails, you are in that platform's insolvency process, not the issuer's. Gemini Earn users' assets were frozen from November 16, 2022 until distributions completed in mid 2024, roughly 19 months, even though the underlying assets largely existed (Gemini distribution announcement, May 29, 2024).

4. Check any yield offer in 60 seconds

Six questions. If you cannot answer one from the offer's own documents, that is your answer.

  1. Who is actually paying, and are they the issuer? If the payer is the issuer of a US payment stablecoin, Section 4(a)(11) of the GENIUS Act (July 18, 2025) prohibits the payment. If it is an exchange or app, you are in the rewards loophole: discretionary, revocable, under active rulemaking (OCC NPRM, February 25, 2026).
  2. What is the spread over the 3 month T-bill, today, dated? Look up the current bill yield on the US Treasury's daily par yield curve. Every point above it is a risk premium. In May 2022 Anchor's spread over bills was roughly 18 percentage points. That was the receipt, in advance.
  3. Who is the borrower? If your coins are lent out, you are a creditor. Celsius (Chapter 11, July 13, 2022), BlockFi (November 28, 2022), Voyager (July 5, 2022), and Genesis (January 19, 2023) creditors can tell you how that ranks.
  4. Is anything insured, and by whom, in writing? FDIC insurance does not cover crypto platforms or stablecoins (FDIC fact sheet, July 28, 2022). Any offer implying it is describing coverage that does not exist, and, since July 18, 2025, making a claim federal law prohibits issuers from making.
  5. Can you withdraw right now, and what can suspend that? Read the terms for the words "may suspend," "lockup," "cooldown," or "gates." Every collapse on this page began as a withdrawal pause: Celsius June 12, 2022; Voyager July 1, 2022; BlockFi November 10, 2022; Gemini Earn November 16, 2022.
  6. Search the platform's name plus "withdrawals paused" and plus "SEC." Sixty seconds of search history is the cheapest due diligence in finance. The enforcement record above was public, dated, and free before each subsequent collapse.

Sources (primary, dated)

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