Quick answer
Not from the issuer. The US GENIUS Act bars payment stablecoin issuers from paying holders any interest or yield, the EU's MiCA bars interest on e-money tokens, and the Bank of England says systemic sterling stablecoin issuers may not pay interest. The interest earned on reserves goes to the issuer.
Key points
- A payment stablecoin is backed by reserves such as cash, bank deposits and short-term Treasury bills, which can earn interest for the issuer.
- The GENIUS Act says no permitted or foreign payment stablecoin issuer may pay holders any form of interest or yield for holding, using or keeping the coin.
- The Act takes effect on the earlier of 18 months after its July 18, 2025 enactment or 120 days after final regulations.
- MiCA bans interest on e-money tokens by issuers and by crypto-asset service providers, and counts holding-time rewards from third parties as interest.
- A 'yield' offer on a stablecoin means someone other than the reserves is taking risk to pay you — find out who, and what you are lending.
On this page
#Where does the interest on a stablecoin's reserves go?
A US payment stablecoin must be backed by reserves on an at least 1 to 1 basis, and the eligible reserves include coins and currency, insured bank deposits and Treasury bills, notes or bonds with a remaining maturity of 93 days or less[1]. Several of those assets pay interest. The question is who keeps it.
Under the GENIUS Act, the answer is the issuer. No permitted payment stablecoin issuer or foreign payment stablecoin issuer may pay the holder any form of interest or yield, whether in cash, tokens or other consideration, solely in connection with the holding, use or retention of the stablecoin[1]. Federal Reserve Governor Christopher Waller has noted that, as with bank deposits, the interest rate environment will have a significant effect on issuers' profitability[2].
Where the money goes
- You buy a $1 coin — Pay $1 to the issuer
- Issuer reserves — Cash, deposits, T-bills
- Interest earned — Paid to the issuer
- You redeem $1 — On redemption, no interest
Worked example
Worked example: $10,000 of stablecoins held for a year
Assumes the reserves earn 4% a year, a round figure close to the Fed's 3.75%–4% target range after September 2026; actual reserve returns vary. Calculated in code.
- Your stablecoins
- $10,000
- Interest earned on matching reserves at 4%
- $400.00 (kept by the issuer)
- Interest paid to you by the issuer
- $0 — barred under the GENIUS Act
- What you can redeem
- $10,000
- Issuer's reserve income per $1 billion outstanding at 4%
- $40 million a year
#What exactly does the US law ban, and when?
The ban sits in section 4(a)(11) of the GENIUS Act, headed "Prohibition on interest"[1]. Its wording names issuers — permitted payment stablecoin issuers and foreign payment stablecoin issuers — and covers interest or yield paid in cash, tokens or other consideration for holding, using or retaining the coin[1]. The text of that paragraph does not name exchanges, wallets or other third parties, which is one reason to read any third-party 'reward' carefully.
Timing matters. The Act was approved on July 18, 2025 and takes effect on the earlier of 18 months after enactment or 120 days after the primary federal payment stablecoin regulators issue final regulations[1]. Eighteen months after enactment is January 18, 2027. Until then, a claim that the Act "requires" something describes what will apply, not what applies today. The law also states that payment stablecoins shall not be backed by the full faith and credit of the United States or be subject to FDIC deposit insurance[1].
#How do EU and UK rules treat stablecoin interest?
In the EU, MiCA has its own rules for a type of stablecoin it calls an e-money token — see MiCA explained. Article 50 says issuers of e-money tokens shall not grant interest, crypto-asset service providers shall not grant interest when providing crypto-asset services related to them, and any remuneration or other benefit related to the length of time a holder keeps the token counts as interest, including when a third party pays it[3].
In the UK, the Bank of England's June 22, 2026 policy statement on sterling-denominated systemic stablecoins keeps its position that systemic stablecoins should not pay interest to coinholders[4]. It also sets a backing mix of 70% short-term UK government debt and 30% unremunerated Bank of England deposits[4].
| Jurisdiction | Rule | Who it names | Status |
|---|---|---|---|
| United States | GENIUS Act s.4(a)(11): no interest or yield for holding, using or retaining[1] | Permitted and foreign payment stablecoin issuers | Effective by Jan 18, 2027 at the latest[1] |
| European Union | MiCA Art. 50: no interest on e-money tokens[3] | Issuers and crypto-asset service providers; third-party holding rewards count as interest | Regulation (EU) 2023/1114[3] |
| United Kingdom | No interest to coinholders on systemic sterling stablecoins[4] | Issuers of systemic stablecoins | Policy statement, June 22, 2026 |
Summaries of the official texts; each regime has detailed definitions and exceptions.
#Why do regulators ban interest on stablecoins?
The official texts above state the rules rather than a single reason, but supervisors' speeches show the concerns. Governor Michael Barr has said stablecoins will be stable only if they can be reliably and promptly redeemed at par in a wide range of conditions, and that issuers have an incentive to maximize the return on their reserve assets, which can increase profits in good times but risks undermining confidence during market stress[5]. Governor Waller has said stablecoins are forms of private money and, like any form of private money, are subject to run risk[2].
Paying interest would also make a stablecoin look more like a bank deposit — which it is not. Bank deposits can pay interest and are insured up to a limit; the differences are laid out in stablecoin vs CBDC vs bank deposit. If you want interest on cash, compare the APY on insured accounts using APR vs APY explained.
#What should you ask before taking a 'stablecoin yield' offer?
Five questions for any stablecoin yield offer
Who is paying?
If it is not the issuer, find out which company is paying and from what income.
What are you giving up?
Ask whether your coins will be lent out or locked up, and what happens to them if the borrower or the platform fails.
Who holds the keys?
Coins left on a platform depend on that platform; see crypto custody explained.
Is it insured?
Payment stablecoins are not covered by FDIC deposit insurance under the GENIUS Act.
Which rules apply?
EU rules treat holding-time rewards as interest even from third parties; US issuer rules are written differently.
Common beginner mistakes
Treating a stablecoin like a savings account
The issuer cannot pay you interest under the GENIUS Act once it applies, and the coin is not FDIC-insured. A savings account at an insured bank is a different product.
Assuming 'rewards' are not interest
Under MiCA, benefits linked to how long you hold an e-money token count as interest even when a third party pays them.
Reading the law as already in force
The GENIUS Act's effective date is the earlier of 18 months after enactment or 120 days after final rules. Check dates before relying on it.
Ignoring where the yield comes from
If your coins are lent out to generate a return, you carry the borrower's and the platform's risk.
The bottom line
Stablecoin reserves can earn interest, but the rules in the US, EU and UK keep that income with the issuer rather than the holder. In the US the ban applies once the GENIUS Act takes effect, no later than January 18, 2027. Treat any 'stablecoin yield' as a separate product, find out who is paying and what risk you take on, and remember the coin itself is not insured.
Frequently asked questions
Can I earn interest on USDC or other dollar stablecoins?
Not from a permitted issuer under the GENIUS Act, which bars issuers from paying any interest or yield for holding, using or retaining the coin[1]. Offers from other companies are separate products with their own risks.
Who earns the interest on stablecoin reserves?
Does the ban apply in Europe?
Yes, for e-money tokens. MiCA Article 50 bars issuers and crypto-asset service providers from granting interest and treats holding-time rewards, even from third parties, as interest[3].
Are stablecoins insured like bank deposits?
No. The GENIUS Act says payment stablecoins shall not be subject to FDIC deposit insurance[1].
Sources
- Public Law 119-27 — Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) — US Government Publishing Office (govinfo), 2025 Primary
- Reflections on a Maturing Stablecoin Market (speech by Governor Christopher J. Waller, February 12, 2025) — Board of Governors of the Federal Reserve System, 2025 Primary
- MiCA Article 50 — Prohibition of granting interest — ESMA Interactive Single Rulebook (Regulation (EU) 2023/1114), 2023 Primary
- Sterling-denominated systemic stablecoins: policy statement — Bank of England, 2026 Primary
- Brief Remarks on Stablecoins (Governor Michael S. Barr, March 31, 2026) — Board of Governors of the Federal Reserve System, 2026 Primary
