The GENIUS Act’s ban on yield could dampen the appeal of digital dollars, particularly as tokenization efforts in traditional finance gain momentum.
The recent passage of the US GENIUS Act was widely celebrated as a major step forward for stablecoin adoption, but a key provision may curb the appeal of digital dollars compared to money market funds, raising questions about whether the bill’s authors were swayed by banking industry pressure to restrict yield-bearing stablecoins.
The GENIUS Act expressly bans issuers from offering yield-bearing stablecoins, effectively preventing both retail and institutional investors from earning interest on their digital dollar holdings.
Because of this, Temujin Louie, CEO of crosschain interoperability protocol Wanchain, cautioned against viewing the legislation as an unqualified win for the industry.
