The introduction of the GENIUS Act in the United States has changed the regulatory landscape for stablecoins, directly impacting the way yield is offered and how crypto-native companies can compete with traditional banks. While the Act has restricted interest-bearing payment stablecoins, it has pushed market participants to seek returns through alternative DeFi mechanisms. Industry voices emphasize that the search for yield continues, with service fees and staking structures evolving in place of direct interest payments.
Yield innovation shifts under new rules
The GENIUS Act, now a key component of U.S. stablecoin regulation, has specifically targeted the issuance of stablecoins with built-in passive yield. However, platforms continue to engineer returns by leveraging decentralized finance. Stefan Muehlbauer, Head of U.S. Government Affairs at CertiK—a blockchain security firm providing smart contract audits and risk assessments—noted that while banks continue to resist yield-generating products, DeFi players are designing alternatives that circumvent direct interest models.
Muehlbauer observed that the market is reacting by differentiating between products labeled as interest and those viewed as service-based rewards. DeFi protocols employing staking features aim to keep user incentives alive even as interest accrual within stablecoins is banned. Anton Efimenko, co-founder at 8Blocks—a firm specializing in algorithmic trading and crypto research—stated that “rebasing is basically banned”, but stablecoins can still be used for yield in DeFi environments. He suggested that stablecoin issuers might create their own platforms for distributing rewards, evolving business models under the constraints of the new law.
This shift has placed greater emphasis on product structuring and compliance, requiring both creativity and attention to regulatory boundaries as the market adapts to change.
Federal charters and evolving competition
Federal charters have emerged as transformative tools in the U.S. crypto sector, effectively granting crypto-native companies entry into regulated financial activities and reducing their dependence on legacy banking institutions. According to Muehlbauer, the approval of national trust bank charters for firms such as Circle and Paxos dismantles former regulatory barriers that insulated traditional banks.
Federal licensing provides these digital asset issuers with the authority to offer payment and settlement services, promoting competition on more equal terms with longstanding financial players. Fernando Lillo Aranda, Marketing Director at Zoomex—a crypto derivatives exchange—remarked that once firms operate under such charters, they become directly regulated financial institutions, no longer needing to rely solely on banks for access and legitimacy.
Despite these advances, Lillo Aranda emphasized that traditional banks still dominate distribution, client relationships, and market trust. Efimenko added that while competition has increased, banks and asset managers continue to benefit from entrenched customer bases. As a result, banks may retain the upper hand in distribution even as new players enter the field. Muehlbauer stated,
Banks are taking aim at yield that is earned as interest, while DeFi players are innovating around products that treat rewards more as a service fee through mechanisms such as staking.
Federal charters have given crypto-native issuers increased autonomy, but the process of achieving scale, trust, and mainstream integration remains ongoing.
Federal structure tempers state innovation
Although the GENIUS Act set a nationwide standard for stablecoins, state-level regulatory frameworks such as the Wyoming Model and New York’s BitLicense still operate but now function within federal guidelines. Muehlbauer pointed out that states have seen their autonomy diminish as federal standards set minimum requirements for capital and reserves in the stablecoin market. He commented,
Even successful state-chartered stablecoin issuers face a definitive ceiling. Once volume hits $10 billion, they must transition to primary federal oversight by the OCC.
States remain active in licensing and supervision, but the main authority has shifted to Washington, changing the scope of experimentation and decentralized innovation in crypto regulation.
Status of token classification remains unresolved
While stablecoins now have a defined legal route, broader uncertainties persist around how digital tokens are categorized under U.S. law. The pending CLARITY Act seeks to differentiate “Ancillary Assets,” defining when tokens tied to central organizations can become treated as “Digital Commodities” once decentralized enough. Muehlbauer explained that the Act’s “Maturity” test would let tokens leave the security category as networks mature, with a process allowing SEC review or challenge. The outcome of this framework could influence both token issuers and secondary market activities as it progresses through negotiation phases.
