stable coins

Story: GENIUS Act Blocks Stablecoin Yield Payments as FDIC Tightens Reserve Rules

By Dan Saada

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FDIC Sets New Reserve Standards. The FDIC's proposal targets issuers under its watch.

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Who Benefits From the New Model. PayPal and Visa are already adapting. PayPal launched a feature that lets users convert crypto to…

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What Comes Next for Stablecoin Economics. The regulatory framework is still evolving. The FDIC proposal is just that—a proposal.

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Congress just killed direct stablecoin yields. The GENIUS Act bars issuers from paying holders interest on their tokenized dollars, and the move is already rerouting billions…

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The FDIC dropped its proposal on April 7. It wants new standards for reserves, redemptions, and capital requirements across the board.

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The FDIC's proposal targets issuers under its watch. It's pushing for strict reserve backing, redemption protocols, and capital buffers.

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GENIUS requires 1:1 reserve backing. Cash and short-term Treasuries, basically. Those reserves earn income, obviously. Treasuries pay interest.

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Circle and Coinbase show how the money moves now. Circle issues USDC. Coinbase distributes it. Both companies earn from reserve income and distribution agreements.

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PayPal and Visa are already adapting. PayPal launched a feature that lets users convert crypto to stablecoins and earn merchant rewards. Not yield, technically. But it's a benefit.

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The Federal Reserve has been watching stablecoin vulnerabilities for a while. Market integration is getting tighter, and the Fed wants to understand how shocks in one part of the…

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Financial institutions are navigating a maze. Regulations are still being written. The FDIC proposal is out for comment.

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Stablecoin issuers used to compete on yield. Now they compete on distribution, partnerships, and platform integrations. Circle's relationship with Coinbase is a model.

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Related: Kbank Tests Ripples XRP Tech for Cross-Border Payments as Seoul Preps Stablecoin Rules

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The shift is forcing innovation in weird ways. If you can't pay yield, you build loyalty programs. You offer faster settlements. You cut transaction fees.

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Asset managers are winning big here. BlackRock, Pimco, others—they're managing billions in stablecoin reserves. They earn fees for that.

The Currency Analytics

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