Stablecoin yield vs tokenized money market funds: why issuers cannot pay interest and who does instead
The GENIUS Act bans issuer-paid yield on stablecoins. Exchanges, DeFi and $14.8bn of tokenized money market funds pay it anyway. How each route works, what it costs, and a $20m treasurer's worked example.
Key takeaways
- The GENIUS Act, signed July 18, 2025, bars a licensed issuer from paying interest or yield for holding its coin, but says nothing about exchanges, wallets or DeFi protocols paying holders; that gap is now the central fight in US stablecoin policy.
- The OCC’s February 2026 proposal would presume that an issuer paying an affiliate or related third party that then pays holders is a prohibited arrangement; comments closed May 1, 2026 and the Comptroller has said he wants a final rule by November 2026.
- Coinbase has kept paying USDC rewards through the fight, moving them behind the Coinbase One paywall and lifting the rate to 3.75% on September 17, 2026, two days after the Senate failed to advance the CLARITY Act 49 to 50.
- Tokenized money market and Treasury funds reached $14.82bn across 109 products on October 6, 2026 per rwa.xyz, led by Circle’s USYC ($2.40bn), Ondo’s USDY ($2.29bn), BlackRock’s BUIDL ($2.25bn), Franklin Templeton’s BENJI ($1.71bn) and WisdomTree’s WTGXX ($1.23bn).
- Exchanges accept these tokens as margin: Binance added BUIDL as off-exchange collateral in November 2025, Bybit accepted Franklin Templeton’s Benji shares on September 28, 2026, and the CFTC’s December 2025 pilot lets futures brokers take tokenized Treasuries as collateral.
Who this is for: Treasurers, fund operations teams, founders holding stablecoin balances and policy readers who want to know why a stablecoin cannot legally pay interest, how the market pays it anyway, how tokenized money market funds differ, and which instrument fits a given balance, horizon and risk budget.
Roughly $307bn of dollar stablecoins were in circulation in early October 2026 per DefiLlama, and the people holding them earn nothing from the issuer. That is by design. The GENIUS Act, the first US federal stablecoin law, prohibits a licensed issuer from paying interest or yield on a payment stablecoin. The reserve income, mostly Treasury bills and repo earning around 4% as of October 2, 2026 per the Federal Reserve’s H.15 release, stays with the issuer and its distribution partners.
Holders have not accepted that quietly. Exchanges pay “rewards” funded by revenue shares, DeFi lending markets pass borrowers’ interest to depositors, and asset managers have wrapped real money market funds into tokens such as BlackRock’s BUIDL and Franklin Templeton’s BENJI that pay the Treasury yield as fund dividends. These products look similar on a wallet screen. Legally and operationally they are very different, and the differences decide who can hold them, what you can do with them, and what you lose if something breaks.
This guide explains the yield ban, maps the routes built around it, describes what a tokenized money market fund is, compares yields, fees, settlement and regulatory status, and works through a treasurer parking $20m for 90 days. If you need the basics first, start with what a stablecoin is and how tokenization of real-world assets works.
Stablecoin yield and tokenized funds by the numbers
Why the GENIUS Act bans issuer-paid yield
The Guiding and Establishing National Innovation for US Stablecoins Act was signed on July 18, 2025. It creates a federal licence category, the permitted payment stablecoin issuer (PPSI), requires one-to-one reserves in cash and Treasury bills, and gives the OCC, Treasury and the banking agencies the job of writing rules. Among the issuer requirements is a short prohibition: a PPSI may not pay a holder any form of interest or yield solely in connection with holding, using or retaining the stablecoin. The OCC’s March 2026 summary of its own proposal repeats that statutory language nearly verbatim.
The bank deposit argument
The ban exists because banks asked for it. A stablecoin paying the Treasury bill rate while settling instantly on a public chain is, from a bank’s point of view, a money market fund with a payments rail and none of a bank’s obligations. Bank trade groups argued in 2025 that interest-bearing stablecoins would pull deposits out of the regional banks that fund local lending. The compromise was to treat payment stablecoins as payment instruments, not savings products: the coin moves money, the reserve income belongs to the issuer.
What the ban does not cover
The text restricts the issuer. It does not restrict a digital asset service provider (the law’s term for exchanges, brokers and wallets), a lending protocol, or a fund that happens to be tokenized. Law firm summaries describe this as a structural gap rather than an oversight: negotiators chose not to extend the prohibition to intermediaries. Everything in the next section lives in that gap.
Timetable for the rules
The Act takes effect on the earlier of January 18, 2027 or 120 days after final rules. The OCC published a 376-page proposal on February 26, 2026, took comments to May 1, and has committed to a final rule by November. Treasury proposed its section 3 rules on who may issue, offer and sell stablecoins on August 18, 2026 (comments due October 19) and on September 30, 2026 issued an interim final rule for the Stablecoin Certification Review Committee, with a $10bn threshold above which issuers must move to federal supervision within 360 days. From July 18, 2028 a service provider may not sell a payment stablecoin in the US unless a permitted issuer issued it. For how the agencies divide crypto oversight more broadly, see SEC vs CFTC crypto regulation.
How the industry routes around the ban
Four routes carry most of the yield holders actually receive. They differ in who pays, where the money comes from, and what the holder’s legal claim is.
Route one: exchange rewards funded by revenue shares
Circle issues USDC and earns the reserve income. Coinbase, which distributes USDC, receives a share of it: Forbes reported in May 2026 that Circle paid Coinbase $908m in distribution costs in 2024, more than Circle’s net income that year, and that Coinbase’s stablecoin revenue was $305m in Q1 2026, its largest revenue line. Coinbase then pays USDC holders on its platform a “reward” from its own revenue. Because the payer is Coinbase, not Circle, the companies argue the arrangement is outside the issuer-only ban.
Coinbase restricted USDC rewards to paying Coinbase One members in 2025 as rates fell, then on September 17, 2026, two days after the Senate failed to advance the CLARITY Act, raised the rate to 3.75% on balances of at least $1. Average USDC balances on Coinbase were about $19bn in early 2026 per Forbes, more than a quarter of all USDC.
Route two under fire: the OCC’s rebuttable presumption
Regulators noticed. The OCC’s February 2026 proposal presumes a violation when a PPSI contracts to pay an affiliate or “related third party” that then pays yield to holders, unless the issuer rebuts it. “Related third party” includes firms offering yield payment services or white-labelling stablecoins. The Bank Policy Institute asked the OCC to name exchange-paid rewards explicitly; Coinbase and the Blockchain Association argued the statute reaches only issuer payments. Comptroller Jonathan Gould has said the agency intends to finalise by November 2026.
The Senate tried to settle it in statute. The CLARITY Act cleared the Senate Banking Committee 15 to 9 on May 15, 2026 with language from Senators Thom Tillis and Angela Alsobrooks: no rewards on idle balances that are “economically or functionally equivalent” to deposit interest, but activity-based rewards tied to payments, transfers and platform use stay legal. The bill failed cloture 49 to 50 on September 15, 2026, and Polymarket priced 2026 passage at about 7% in late September. Until a rule or statute lands, exchange rewards sit in limbo.
Route three: DeFi lending and synthetic dollars
On Aave, Morpho and similar protocols, a USDC depositor earns the interest paid by borrowers who post crypto collateral. No issuer is involved and the rate floats with borrowing demand. Sky (formerly MakerDAO) runs a different model: USDS deposited into sUSDS earns the Sky Savings Rate, set by governance and funded by lending income plus tokenized Treasury bills; in May 2026 it was 3.75%, with about $7.5bn of USDS outstanding. Ethena’s USDe is a synthetic dollar backed by staked ETH and short perpetual futures; sUSDe passes through the funding rate, a variable 7% to 12% in eco.com’s May 2026 comparison, which can go negative. USDe supply was about $4.96bn in October 2026 per DefiLlama. For the mechanics behind that funding yield see perpetual futures, funding rates and liquidations.
Route four: yield-bearing dollar tokens that are legally securities
Ondo’s USDY is the clearest example. It is a tokenized note secured by short-dated Treasuries and bank deposits, sold under Regulation S to non-US persons from $500, and its price accrues yield; net yield was about 4.4% in May 2026 and supply reached $2.29bn by October 6, 2026 per rwa.xyz. Because it is a security, the GENIUS ban does not touch it, but US retail cannot buy it and secondary liquidity runs through automated market makers with slippage.
What a tokenized money market fund actually is
A tokenized money market fund (MMF) is an ordinary fund investing in Treasury bills, repo and cash, whose shares are recorded on a blockchain alongside the transfer agent’s register. The token is the share. Dividends are the Treasury yield net of the fund’s fee. Because holding the token means being a registered shareholder, every product restricts transfers to whitelisted, KYC-verified wallets. The structure drives who can buy, how fast you can get out, and what protections apply.
The main products
| Product (issuer) | Structure and eligibility | Size and date | Fee and yield data | Redemption |
|---|---|---|---|---|
| BUIDL (BlackRock, via Securitize) | Private fund, qualified purchasers, $5m minimum; BNY Mellon administrator | $2.25bn, 104 wallets, Oct 1, 2026 (Securitize data via McGlynn) | Net yield about 4.5% in May 2026 (eco.com); fee set in offering docs | T+0 to USDC via Circle contract; T+1 wire, $250k minimum before 3pm ET |
| USYC (Circle, ex Hashnote) | Qualified investors, $100k minimum; reverse repo on Treasuries | $2.40bn, Oct 6, 2026 (rwa.xyz) | Net yield about 4.5%, May 2026 | Same-day to USDC during US market hours |
| USDY (Ondo) | Reg S tokenized note, non-US only, $500 minimum | $2.29bn, Oct 6, 2026 (rwa.xyz) | Net yield about 4.4%, May 2026 | Secondary AMM liquidity, slippage possible |
| BENJI / FOBXX (Franklin Templeton) | 1940 Act government money fund, US retail via Benji app, $20 minimum | $1.71bn, Oct 6, 2026 (rwa.xyz) | Net yield about 4.3%, May 2026 | T+1 through fund operations |
| WTGXX (WisdomTree) | Rule 2a-7 money fund under the 1940 Act, $1 minimum, stable $1.00 NAV | $1.23bn, Sep 17, 2026 (Genfinity) | 0.25% expense ratio; daily accrual, monthly payout | US business days |
| OUSG (Ondo) | Qualified purchasers, non-US, $100k minimum; holds BUIDL and other funds | $704m, Apr 2026 (FinanceFeeds) | Net yield about 4.5%, May 2026 | 24/7 mint and redeem against USDC |
| JTRSY (Janus Henderson Anemoy, on Centrifuge) | BVI fund, professional non-US investors, about 30 holders | $882m, Aug 2026; crossed $1bn in Q1 2026 (Crypto Briefing) | 25 bps fee from NAV; 7-day APY about 4.4%, Aug 2026 | Same-day via USDC for whitelisted investors |
The category splits between SEC-registered 1940 Act funds open to US retail (BENJI, WTGXX) and private or offshore funds for qualified purchasers and non-US investors (the rest). Net yields cluster tightly, with FinanceFeeds measuring a spread under 35 basis points in May 2026, so competition is on fees, minimums, chains, redemption speed and collateral acceptance.
How big the category has become
rwa.xyz counted $14.82bn across 109 funds and 86,085 holders on October 6, 2026, down 6.6% over 30 days. Trackers differ on what they include: FinanceFeeds, counting a narrower set of flagship products, put the market at $6.8bn in May 2026. June 2026 Pantera data cited by analyst Daniel McGlynn showed the trade-off: permissioned tokens held 59% of tokenized value but generated 0.2% of on-chain trading volume, and BUIDL’s roughly $745m of monthly transfers across 27 active wallets were mostly redemptions and collateral moves. These are settlement and collateral instruments, not trading assets.
Regulatory status: payment instrument or security?
The split that matters is payment stablecoin under GENIUS versus security under the Securities Act and Investment Company Act. The regimes differ on regulator, holder protections and yield.
- Payment stablecoins (USDC, USDT, PYUSD, USD1). GENIUS regime: one-to-one reserves, redemption at par, no issuer yield, not securities. Holders are creditors with a statutory priority claim on reserves.
- Registered money funds (BENJI, WTGXX). Investment Company Act of 1940 and Rule 2a-7: liquidity floors, maturity caps, board oversight, SEC examination. The blockchain is a record-keeping layer. US retail can buy them.
- Private tokenized funds (BUIDL, USTB, OUSG, USYC). Exempt under section 3(c)(7) and Regulation D or S; qualified purchasers or non-US persons only, higher minimums, transfer restrictions coded into the token.
- Tokenized notes (USDY). A debt security backed by Treasuries, sold offshore; yield accrues to price.
- DeFi wrappers (sUSDS, sUSDe). Unregistered in the US; whether a yield-bearing receipt token is a security is unsettled, and US-facing front ends typically block them.
What the SEC has and has not done
SEC staff issued a no-action letter on December 11, 2025 allowing DTC, the central securities depository, to run a three-year tokenization pilot for Russell 1000 stocks, major index ETFs and US Treasuries on approved blockchains. DTCC processed its first live tokenized trades on July 15, 2026 with more than two dozen firms and plans a broader launch in October 2026. On September 17, 2026 the SEC announced a five-year innovation exemption for tokenized equities venues, capped by volume and at 75 large-cap names per venue; it gives no Investment Company Act relief, so tokenized money funds must still work within the 1940 Act or stay private. The CFTC issued FAQs on tokenized permitted investments, which CCS covered in this news piece.
Tokenized funds as collateral
The use case that turned tokenized MMFs into a $14bn category is margin. A trader who posts USDC earns nothing on it; a trader who posts BUIDL earns the Treasury yield while the position is open.
- OKX and Binance. OKX piloted BUIDL as margin in April 2025 with Standard Chartered as custodian; Binance added BUIDL as off-exchange collateral for institutions on November 14, 2025 through Ceffu, with a BNB Chain share class.
- CFTC announced a tokenized collateral pilot on December 8, 2025 letting futures commission merchants accept bitcoin, ether, USDC and tokenized Treasuries and money fund shares as collateral, with weekly reporting.
- CME Group and DTCC. CME is building a tokenized cash instrument with Google Cloud and says it is open to stablecoins and tokenized money funds as collateral with credit-based haircuts; DTCC’s July 15, 2026 live trades included JPMorgan converting tokenized ETF holdings to meet CME margin.
- Bybit began accepting Franklin Templeton’s Benji shares through ByCustody on September 28, 2026, crediting USDT or USDC trading power without moving the shares onto the exchange.
The structure is the same each time: the token sits with a custodian in a tri-party arrangement, the venue mirrors its value after a haircut, and the client keeps earning dividends. Custody is the weak point, which is why crypto custody matters more here than in spot trading. For balance sheet context see bitcoin treasury companies explained.
Yields, fees and settlement compared
With Fed funds at 3.88% and the 3-month bill at 4.01% on October 2, 2026, every instrument here is priced off the same 4% curve. What differs is how much reaches you, how certain it is, and when you can get your cash.
| Route | Indicative yield (date) | Who pays and from what | Settlement and exit | Main risk |
|---|---|---|---|---|
| Idle USDC or USDT | 0% | Nobody; reserve income stays with issuer | On-chain 24/7; fiat redemption on issuer’s business days | Issuer and bank reserve risk; opportunity cost |
| Coinbase One USDC rewards | 3.75% (Sep 17, 2026) | Coinbase, from its USDC revenue share | Instant on platform; subject to exchange withdrawal rules | Rate changeable at will; OCC rule may force reduction; exchange counterparty |
| sUSDe (Ethena) | 7% to 12% variable (May 2026) | Funding rate on short perps plus ETH staking | On-chain, unstake cooldown applies | Negative funding, exchange counterparty, depeg |
| Tokenized MMF (BUIDL, BENJI, WTGXX, OUSG) | 4.3% to 4.5% net (May 2026); JTRSY 4.4% (Aug 2026) | Fund dividends from T-bills and repo, net of fee (WTGXX 0.25%, JTRSY 0.25%) | T+0 to USDC for BUIDL and OUSG; T+1 for 1940 Act funds; cut-offs for wire | Fee drag, eligibility limits, custodian, redemption queue in stress |
| Direct 3-month T-bill | 4.01% (Oct 2, 2026) | US Treasury | T+1 through broker; sale before maturity at market price | Rate locked, so no upside if rates rise; cannot be posted as crypto collateral |
Settlement mechanics in practice
“24/7” hides three different things. On-chain transfer between whitelisted wallets is 24/7 on every product. Redemption into USDC is 24/7 only where the sponsor has built a facility: OUSG mints and redeems against USDC around the clock, BUIDL holders can swap to USDC through a Circle contract, and the Basin facility launched in May 2026 offers up to $1bn a day for same-minute BUIDL redemptions. Redemption into bank dollars runs on fund hours: BUIDL takes $250,000 minimum before 3pm ET for a wire, 1940 Act funds settle T+1, Superstate processes once per US business day. Nobody gets dollars in a bank account on Saturday.
How we got here: a timeline
Worked example: a treasurer parks $20m for 90 days
A US software company holds $20m of USDC from customer payments and needs the cash in 90 days for a tax payment. Assumptions: the 3-month bill yields 4.01% (Federal Reserve H.15, October 2, 2026); fund gross yield tracks the bill; the fund fee is 0.25%, the published rate for WTGXX and JTRSY, since BUIDL’s fee sits in offering documents; the Coinbase rate is the 3.75% Coinbase One rate of September 17, 2026, used as the public benchmark although an institutional account would be quoted separately; simple interest, 365-day basis; rates unchanged over the period. Wire and gas costs are ignored as immaterial against $20m.
| Route | Rate used | 90-day income | Cost to exit | Risk notes |
|---|---|---|---|---|
| A. Hold USDC idle | 0.00% | $0 | None on-chain; Circle redemption on business days | Issuer exposure with no compensation; opportunity cost about $197,800 |
| B. Coinbase One USDC rewards | 3.75% | $184,932 | Withdrawal on platform; membership fee not included | Rate can change daily; OCC final rule due November 2026 could force a cut mid-period; exchange counterparty |
| C. Tokenized MMF (qualified purchaser, 0.25% fee) | 3.76% net | $185,425 | T+0 to USDC via sponsor facility; T+1 wire with cut-off | Floating: a 25 bp Fed cut halfway through costs about $6,200; custodian and whitelist dependency; onboarding takes days |
| D. Direct 3-month T-bill | 4.01% | $197,753 | Matures to cash on day 91 at the broker; early sale at market | Rate locked; must convert USDC to dollars first (one business day) and back afterwards; cannot be posted as exchange collateral |
- Baseline: $20,000,000 × 4.01% × 90 ÷ 365 = $197,753. That is what a bill pays and what the issuer of idle USDC keeps.
- Route B: $20,000,000 × 3.75% × 90 ÷ 365 = $184,932, about $12,800 below the bill before any membership fee.
- Route C: 4.01% less 0.25% gives 3.76%; $20,000,000 × 3.76% × 90 ÷ 365 = $185,425. Nearly identical to route B, but the claim is on a Treasury fund, not an exchange’s goodwill, and the shares can be pledged as margin.
- Route D wins on income by about $12,300 over the fund and locks the rate, at the price of leaving the crypto rails entirely for 90 days.
The result: if the cash is truly idle, the bill is the highest and safest return. If the company must stay on-chain, settle 24/7 or post the balance as collateral, the tokenized fund gives up roughly 25 basis points for that flexibility. Exchange rewards pay about the same as the fund with a weaker legal claim and a rate that depends on a regulatory outcome due within the holding period. Holding USDC idle costs almost $200,000 for the same issuer risk. Tax differs too: bill interest is exempt from state income tax, government money fund dividends only partly, and rewards are ordinary income; model after-tax with counsel.
How to evaluate a yield route: a checklist
- Who is legally paying me? An issuer cannot under GENIUS. An exchange’s rate is discretionary and exposed to the OCC’s November 2026 rule. A fund pays a dividend on a security with offering documents.
- What is my claim if the payer fails? Fund shareholder, exchange creditor, or smart contract depositor with no legal counterparty. Rank them and size accordingly.
- Am I eligible? BUIDL needs qualified purchaser status and $5m; OUSG and USDY exclude US persons; BENJI and WTGXX accept US retail from $20 and $1.
- How do I get dollars out, and when? Separate on-chain transfer (24/7), USDC redemption (24/7 only with a facility) and bank wire (cut-offs, minimums, T+1). Test a small redemption first.
- What is the all-in fee? Expense ratio, custodian fee, on and off ramp spreads, gas. A 25 bps fund fee is 6% of a 4% yield.
- Can I use it as collateral? BUIDL at Binance and OKX, Benji shares at Bybit, tokenized Treasuries at FCMs under the CFTC pilot. If you trade, this can be worth more than the yield spread.
Risks and open questions
The largest open question is the OCC’s final rule. If the presumption survives, exchanges receiving issuer revenue shares must show their rewards are not linked to them; Forbes’ May 2026 analysis expects Coinbase to lower USDC rewards and some flows to migrate to tokenized bank deposits, which sit outside GENIUS. If the CLARITY compromise is enacted instead, the line falls between rewards for holding and for doing, and nobody has defined how much “doing” is enough.
Tokenized funds are illiquid in the secondary market by design: McGlynn’s analysis of the June 2026 data estimated a $10m sale of tokenized Treasury fund tokens on secondary venues would take about 126 days versus half a day for tokenized stocks. Redemption facilities such as Circle’s BUIDL contract and the Basin line are what make them liquid, and those are counterparties with their own balance sheets. Concentration is high, custodian whitelists are single points of failure, and 1940 Act protections do not extend to the offshore and private vehicles that hold most of the money.
Finally, rates are turning. The 3-month bill was 4.01% in October 2026 and the September 2026 Fed dot plot pointed lower for 2027. Every route earns less as rates fall, the spread funding exchange rewards compresses first, and stablecoin supply has slipped from its May 2026 peak of $320.6bn to about $307bn. The regulatory settlement is arriving as the incentive to engineer yield weakens.
What to watch next
- October 19, 2026: Treasury section 3 comments close. The rule defines which service providers may offer stablecoins in the US and feeds the July 2028 cut-off for non-permitted coins.
- October 2026: DTCC broader tokenization launch. If participants convert Treasuries and ETFs at scale, tokenized collateral moves from pilots into core US settlement.
- November 2026: OCC final GENIUS rule. Comptroller Gould’s stated target. Watch whether the rebuttable presumption on affiliate-paid yield survives and whether a de minimis or activity-based safe harbour appears.
- January 18, 2027: GENIUS Act effective date. Issuer applications open; the yield ban becomes enforceable against licensed issuers.
- Any Senate motion to reconsider CLARITY. Senator Tillis filed one after the September 15, 2026 cloture failure; revised rewards language would signal a deal is back on.
Glossary
- Permitted payment stablecoin issuer (PPSI)
- The federal or state-licensed entity allowed to issue payment stablecoins under the GENIUS Act, subject to reserve, redemption and no-yield rules.
- Digital asset service provider (DASP)
- The GENIUS Act’s term for exchanges, brokers, custodians and transfer services; the yield ban does not currently apply to them.
- Rebuttable presumption
- A regulatory default that an arrangement is unlawful unless the regulated firm proves otherwise; the OCC proposed one for yield routed through affiliates.
- Tokenized money market fund
- A money market fund whose shares are issued and tracked as tokens on a blockchain; the token is the share and dividends are the fund’s net yield.
- Rule 2a-7
- The SEC rule governing registered money market funds, setting liquidity floors, maturity limits and credit quality standards.
- Qualified purchaser
- An investor with at least $5m in investments, allowed to buy private funds exempt under section 3(c)(7) of the Investment Company Act.
- Regulation S
- The SEC safe harbour for securities offered outside the US to non-US persons; used by USDY, OUSG and JTRSY.
- Off-exchange collateral
- Assets held by a third-party custodian and mirrored on an exchange as trading power, so the exchange never takes custody.
- Sky Savings Rate
- The governance-set yield paid to holders of sUSDS, funded by Sky’s lending income and Treasury bill allocation.
- No-action letter
- SEC staff’s statement that they will not recommend enforcement if a described activity proceeds; DTC received one on December 11, 2025.
Why it matters
The yield ban is the place where the two theories of what a stablecoin is collide. Banks and the GENIUS Act drafters see a payment instrument that should earn nothing, like cash in a wallet. Holders and exchanges see a dollar balance that should earn what dollars earn. The market routes the yield through whoever is not the issuer; the regulators follow the money. The OCC rule due in November 2026 and the fate of the CLARITY compromise will decide whether the $300bn stablecoin base keeps paying holders through intermediaries or whether that yield migrates to tokenized deposits and tokenized funds.
Tokenized money market funds are the quiet winner either way. They hold the Treasury yield legally, they are accepted as margin by exchanges, clearinghouses and now the US central securities depository, and they kept growing through 2026. Their limitation is that they are securities, with the eligibility and liquidity constraints that implies. The next phase is whether those constraints loosen, through retail 1940 Act funds or infrastructure such as DTC’s pilot, faster than the stablecoin yield gap closes. For continuing coverage, see the CCS research hub and the interview archive at crypto videos.
Sources
- Federal Reserve: H.15 Selected Interest Rates (Daily), October 5, 2026
- Federal Register: GENIUS Act Regulations on Payment Stablecoin Issuance, Offer, and Sale, August 18, 2026
- SEC Division of Trading and Markets: No-Action Letter to DTC on Tokenization Services, December 11, 2025
- rwa.xyz: Tokenized US Treasuries dashboard, October 6, 2026
- DefiLlama: Stablecoins market cap, October 6, 2026
- Sullivan & Cromwell: OCC Proposes Regulations to Implement the GENIUS Act, March 2026
- CoinDesk: US regulator’s GENIUS pitch puts dark cloud over crypto sector’s stablecoin model, February 26, 2026
- Forbes: The GENIUS Act Stablecoin Yield Ban Has A Coinbase-Shaped Hole, May 20, 2026
- Banking Dive: Senate panel approves crypto bill, May 15, 2026
- DeFi Rate: CLARITY Act updates, Senate cloture fails 49 to 50, September 2026
- Digital Today: Coinbase raises USDC rewards to 3.75 percent after US Senate stalls Clarity bill, September 17, 2026
- Yahoo Finance: Treasury’s First GENIUS Act Rule Draws a $10 Billion Line Through the Stablecoin Market, October 2026
- CoinDesk: DTCC moves tokenized securities into live trading, July 15, 2026
- Cointelegraph: Binance adds BlackRock’s BUIDL as off-exchange collateral for institutional traders, November 14, 2025
- Unchained: Bybit Accepts Franklin Templeton’s Tokenized Money Fund Shares as Off-Exchange Collateral, September 28, 2026
- Genfinity: MoonPay and WisdomTree Open the $1.2B WTGXX Tokenized Money Market Fund to the United States, September 17, 2026
- Crypto Briefing: Centrifuge tokenizes Janus Henderson Anemoy Treasury Fund as JTRSY crosses $882M, August 2026
- FinanceFeeds: BUIDL, OUSG, and BENJI: inside the $7bn tokenised T-bill market, May 20, 2026
- Daniel McGlynn: Tokenized Treasuries Don’t Trade: Pantera’s Data, BlackRock’s BUIDL and the SEC Innovation Exemption, October 2026
- Eco: Top Tokenized Treasury Funds 2026: BUIDL, OUSG, USDY, BENJI Compared, May 2026
Disclosure: This guide is for education only and is not investment, legal or tax advice.
Frequently asked questions
Why can't a stablecoin pay interest in the US?
The GENIUS Act, signed July 18, 2025, prohibits a permitted payment stablecoin issuer from paying any interest or yield solely for holding, using or retaining its coin. Congress treated payment stablecoins as payment instruments rather than savings products, largely at the urging of bank trade groups worried about deposit flight. The ban applies to the issuer, not to exchanges, wallets or DeFi protocols.
How does Coinbase pay USDC rewards if yield is banned?
Coinbase is not the issuer. Circle issues USDC and shares reserve income with Coinbase under a distribution agreement; Coinbase then pays rewards from its own revenue, 3.75% for Coinbase One members as of September 17, 2026. The OCC's February 2026 proposal would presume such affiliate arrangements unlawful unless rebutted, so the programme's future depends on the final rule expected in November 2026.
What is a tokenized money market fund?
It is a fund holding Treasury bills, repo and cash whose shares are recorded as tokens on a blockchain. The token is the fund share, dividends are the Treasury yield net of fees, and transfers are limited to whitelisted wallets. Examples include BlackRock's BUIDL, Franklin Templeton's BENJI, WisdomTree's WTGXX and Ondo's OUSG. rwa.xyz counted $14.82bn across 109 such products on October 6, 2026.
Are tokenized money market funds securities?
Yes. BENJI and WTGXX are SEC-registered 1940 Act money funds open to US retail. BUIDL, OUSG, USTB and USYC are private funds for qualified purchasers or non-US investors. Ondo's USDY is a tokenized note sold under Regulation S. Because they are securities, the GENIUS Act yield ban does not apply, but eligibility rules, transfer restrictions and securities law disclosures do.
Can I use BUIDL or BENJI as collateral on an exchange?
Increasingly yes. OKX piloted BUIDL as margin in April 2025, Binance added it as off-exchange collateral through Ceffu in November 2025, and Bybit accepted Franklin Templeton's Benji shares via ByCustody on September 28, 2026. The CFTC's December 2025 pilot also allows futures brokers to accept tokenized Treasuries and money fund shares. Collateral sits with a custodian and the exchange mirrors its value after a haircut.
How fast can I redeem a tokenized fund for cash?
On-chain transfers between whitelisted wallets run 24/7. Redemption into USDC is 24/7 only where the sponsor has a facility, such as Ondo's OUSG or BUIDL's Circle contract and the Basin liquidity line. Redemption into bank dollars follows fund hours: BUIDL takes wires above $250,000 before 3pm ET, 1940 Act funds settle T+1, and Superstate processes once each US business day.
Which pays more, a tokenized fund or a Treasury bill?
The bill, by roughly the fund's fee. With the 3-month bill at 4.01% on October 2, 2026, a fund charging 0.25% nets about 3.76%. On $20m over 90 days that is about $185,400 versus $197,800 for the bill. The fund earns the difference back only if you need 24/7 settlement, want to stay in stablecoins, or can pledge the shares as margin.
What happens to stablecoin rewards when the OCC rule is final?
If the rebuttable presumption survives, exchanges receiving issuer revenue shares will need to show their rewards are not linked to those payments, and analysts expect rates to fall and some balances to move to tokenized bank deposits, which sit outside the GENIUS Act. If Congress instead enacts the CLARITY compromise, activity-based rewards would stay legal while rewards for idle balances would not.
This explainer is reviewed and updated as the rules and the market change. Last reviewed October 6, 2026. It is educational content and not financial, legal or tax advice.