The post US Stablecoin Law: No Yield, No Interest… No Users? appeared on BitcoinEthereumNews.com.

The STABLE Bill currently before the US congress specifically restricts stablecoins from earning interest. That’s a BIG problem for the sector. Stablecoins in crypto are pivotal instruments, bridging the gap between digital assets and traditional fiat currencies. However, legislative developments in the United States threaten to stifle innovation in the sector just as a path forward was emerging. The Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025 (the STABLE Act), which is currently proceeding through Congress, provides much legal clarity for the stablecoin sector. It also bans yield. Section 4, part 8 of the Bill is unambiguous on the matter, stating “PROHIBITION ON YIELD.—A permitted payment stablecoin issuer may not pay interest or yield to holders of its payment stablecoins.” This move has sparked a heated debate among industry leaders, policymakers, and consumers about the future viability and attractiveness of stablecoins.​ Stablecoins and Yield – The Crux of the Issue Stablecoins, such as USD Coin (USDC) and Tether (USDT), are digital currencies pegged to the U.S. dollar and backed by cash or other reserve assets like short-term U.S. Treasuries. These reserves generate yield, but currently, the interest earned is typically retained by the issuers rather than passed on to the consumers. The proposed U.S. legislation aims to formalize this practice by explicitly prohibiting stablecoin issuers from paying interest to token holders.​ Brian Armstrong, CEO of Coinbase, has been vocal in his opposition to this legislative direction. In a recent post on his X account, Armstrong argued that U.S. stablecoin legislation should allow consumers to earn interest on their holdings. He emphasized that the government shouldn’t favor one industry over another and that both banks and crypto companies should be permitted and encouraged to share interest with consumers, aligning with a free-market approach. ​ Recent moves by the…

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Filed under: News - @ April 5, 2025 6:21 am