Stablecoin Interest Ban: Who Earns the Yield on Your Dollars?

The GENIUS Act, signed on July 18, 2025, is the first US federal law governing stablecoins. One sentence in it, 46 words long, explains why the interest line on your stablecoin balance says zero. It is not because your issuer is greedy or anyone is stealing from you. It is because paying you is against the law.

This video reads that sentence from the government’s own printing of the statute, follows the money through a public annual report filed with the SEC, and then gives a four-step method to work out what your own holdings generate. It ends with an open question the US Treasury itself has asked about the workaround the industry relies on.

What does the GENIUS Act require stablecoin reserves to be?

Mostly short-term US government debt. Under the law, an issuer must hold reserves backing its outstanding stablecoins on at least a one-to-one basis, and the law lists what those reserves may be:

• US coins and currency, including Federal Reserve notes
• money held in an account at a Federal Reserve bank
• demand deposits at an insured depository institution
• Treasury bills, notes or bonds with 93 days or less remaining to maturity
• money market funds and overnight repurchase agreements built on the same short government paper

The video stresses that this is sensible design. It is why a regulated stablecoin is safer than an unregulated one, and the reason Washington wanted the law. But short-dated government debt pays interest. That is why anyone buys it.

How much interest do stablecoin reserves earn?

The video uses the Treasury’s own daily bill rates. On August 27, 2026, the 13-week bill, the maturity range the law points issuers toward, showed a coupon-equivalent yield of 3.78%. Rates move, so the figure will differ by the time you read this.

Scale it up with one issuer. Circle reported that USDC in circulation grew 72% last year to $75.3 billion. At around 3.78%, that is roughly $2.8 billion a year of interest earned on other people’s dollars.

What does the interest ban actually say?

Section 4(a)(11) of the act is headed “Prohibition on interest.” It reads:

No permitted payment stablecoin issuer or foreign payment stablecoin issuer shall pay the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin.

So one part of the law requires the issuer to put your dollar into interest-bearing government securities, and another forbids passing any of that interest back to you. The video notes this was not a drafting error. It was fought over for months.

Where does the reserve income go?

Circle Internet Group, which issues USDC, is a public company that files a signed annual report with the SEC. Its 2025 report, filed March 9, 2026, shows:

Line item (2025)	Amount
Reserve income	$2.636 billion
Other revenue	$109 million
Total revenue and reserve income	About $2.7 billion
Distribution, transaction and other costs	About $1.6 billion
Net loss from continuing operations	$70 million

That makes about 96% of Circle’s revenue interest earned on customers’ money. The video is fair about the costs: custody, audits, redemptions, compliance and banking relationships are real, and the company posted a loss. But the shape is clear.

The roughly $1.6 billion in distribution costs, which the video puts at about 63% of reserve income, is mostly explained in the filing itself. Under its collaboration agreement, Circle makes payments to Coinbase tied mainly to net reserve income from USDC. The issuer keeps a portion, and both companies then receive allocations based on how much USDC sits on each one’s platform.

In other words, the interest is split according to whose app your dollars are parked in. The person who owns the dollars is not part of the split.

Are stablecoins insured?

No, and the law says so. About a page away from the interest ban, the act states that a payment stablecoin shall not be backed by the full faith and credit of the United States, guaranteed by the US government, or covered by FDIC deposit insurance or NCUA share insurance.

Put the two sentences side by side. A regulated stablecoin pays you no interest and is not insured. A bank account is the opposite on both counts. The video says this is not an argument for moving money into a bank, but for knowing which of the two you are choosing and why.

How do exchanges offer stablecoin rewards?

Through the word “holder.” The law forbids the issuer from paying the holder. When your coins sit on an exchange, the exchange is arguably the holder, and it is not the issuer. So interest can flow from issuer to exchange, which the law does not forbid, and then from exchange to you, which the law does not mention.

The Treasury is not sure that works. In an advance notice of proposed rulemaking published on September 19, 2025, question 14 asks whether regulations should clarify the meaning of “pay,” “interest,” “yield” and “solely,” and in particular “whether and to what extent any indirect payments are prohibited.”

The Treasury did not say the practice is banned or that it is fine. It asked. The video’s point is that anyone claiming exchange rewards are safe forever, or about to be outlawed, is claiming something the government has not decided.

The fight continues in Congress. A market structure bill in the Senate carries a compromise that would prohibit yield on idle balances while allowing rewards tied to activity, and it cleared the Senate Banking Committee 15 votes to 9. The video cites a reported $1.35 billion as one exchange’s annual stablecoin rewards revenue. Neither the current law nor the compromise would pay you simply for holding.

Why did Congress ban stablecoin interest?

To protect bank deposits, according to the video. A Congressional Research Service report titled “The Stablecoin Yield Debate,” dated March 6, 2026, put stablecoins outstanding at roughly $280 billion and US transactional deposits at $6.6 trillion, and reported estimates that stablecoin growth could pull deposits away from banks.

A stablecoin paying 3.78% would be a savings account that settles instantly, works on weekends and needs no branch. Every dollar that leaves a bank is a dollar the bank cannot lend. In the video’s reading, the interest ban is less a consumer protection rule than a competition rule, and that is why the banking lobby is still fighting the exchange workaround.

How to work out your own figure

The video offers a four-step method:

1. Add up every stablecoin balance across every wallet, exchange and platform, including USDC, RLUSD, USDT and PYUSD, and any cash you are holding as stablecoins while you wait to buy.
2. Look up today’s 13-week Treasury bill coupon-equivalent yield on the Treasury’s website.
3. Multiply your balance by that rate.
4. The result is roughly what your holdings generate each year. The amount an issuer is legally allowed to pay you for holding is zero.

At the video’s 3.78% rate, the ladder looks like this:

Stablecoin balance	Interest generated per year
$10,000	$378
$25,000	$945
$50,000	$1,890
$100,000	$3,780
$250,000	$9,450

What to watch next

The video’s conclusion is not that stablecoins are bad. For moving money they are, in its words, the best tool anyone has built, and for a few minutes in transit the lost interest is meaningless. The cost shows up when they are used as money at rest, which by law earns the holder nothing.

Three things to follow:

1. The Treasury’s rulemaking on question 14 and indirect payments.
2. The Senate market structure bill and its compromise on activity-based rewards.
3. The 13-week bill rate, which sets how much your idle stablecoins generate for someone else.

Everything in the video comes from four free public documents: the statute, the Treasury’s rate tables, Circle’s annual report and the Federal Register notice.