Stablecoin Fight Shifts to ₱19.58 trillion ($320 billion) Reserve Income Control
With the yield ban locked in, regulators and market players are now battling over how ₱19.58 trillion ($320 billion) in stablecoin reserve income flows through intermediaries like exchanges, wallets, and custodians.
Key Takeaway
Yield ban locked, but the real money fight is who captures reserve income across the stablecoin stack.
The stablecoin regulation battle has shifted from yield payments to control over how reserve income flows through the digital dollar stack.
FDIC proposed turning GENIUS Act provisions into operating standards on April 7, followed by a White House note on April 8 estimating that eliminating stablecoin yield would increase bank lending by ₱128.48 billion ($2.1 billion) but cost the economy ₱48.94 billion ($800 million) in net welfare. The GENIUS Act bars stablecoin issuers from paying holders any form of interest or yield solely for holding, using, or retaining payment stablecoins. But the ban only covers direct issuer payments.
With direct yield off the table, value now moves through intermediaries—exchanges, wallets, custodians, banks, asset managers, card networks. BlackRock's Circle Reserve Fund reported a seven-day SEC yield of 3.60% as of April 27. Circle makes payments to Coinbase tied principally to net reserve income from USDC, according to Circle's 2025 Form 10-K. Coinbase receives 50% of the remaining payment base after approved participant payments under Circle's distribution structure. Coinbase reported that a hypothetical 150 basis-point move in average rates applied to daily USDC reserve balances would have affected stablecoin revenue by ₱33.04 billion ($540 million) for 2025.
The CLARITY Act passed the House with bipartisan support in July 2025, but Senate Banking Committee sessions were cancelled in mid-January after the yield controversy erupted. Senators Thom Tillis and Angela Alsobrooks brokered a compromise in late March following closed-door negotiations with crypto leaders and banks on separate days.
The GENIUS Act requires stablecoin issuers to maintain reserves backing outstanding payment stablecoins at least one-to-one, with eligible reserve categories including cash, bank deposits, short-term Treasuries, certain repo arrangements, government money market funds, and limited tokenized reserve forms. Additional requirements cover reserve disclosures, redemption policies, reserve-reuse restrictions, capital standards, liquidity requirements, risk management, AML, and sanctions controls. The White House estimated a 0.02% lending effect percentage associated with the ₱128.48 billion ($2.1 billion) lending increase from eliminating stablecoin yield on April 8.
This article was written based on reporting from CryptoSlate.
