In the era of stringent regulations, Coinbase and PayPal confirm rewards on stablecoins: the leading platform offers 4.1% annually on USDC, while PayPal guarantees about 3.7% on PYUSD, circumventing the limits imposed by the GENIUS Act.
What is the GENIUS Act and why does it limit yields on stablecoins?
The GENIUS Act, approved last month in the United States, represents a regulatory turning point for the stablecoin sector. The law legalizes regulated digital assets, but also introduces a decisive restriction: issuers of stablecoin are prohibited from paying interest or passive rewards to holders. Specifically, any “passive yield” between 3% and 5% is excluded: that is, issuers cannot provide financial incentives to the holders of their tokens.
The rationale, supported by Republican leaders, is simple: stablecoins should be used as currency for payments, not as overly lucrative investment products. The aim is to prevent distortions and systemic risks by limiting instruments that can attract savers solely for the return percentages.
Why can Coinbase and PayPal offer rewards on stablecoin?
Coinbase and PayPal have managed to structure their offerings in such a way as not to fall under the ban. Neither company, in fact, is the direct issuer of the stablecoins on which it applies rewards:
- Coinbase offers 4.1% annually on USDC, but the token is issued by Circle. Coinbase stopped being a co-issuer in 2023, although it remains a commercial partner of Circle.
- PayPal corresponds to about 3.7% reward to holders of PYUSD, which is issued by Paxos, a third-party company.
By doing so, the two platforms act as financial operators or payment platforms, not as issuers: the ban of the GENIUS Act, consequently, does not apply to their reward programs.
What did Coinbase declare after the approval of the GENIUS Act?
During the recent earnings call, the CEO of Coinbase reaffirmed the intention to continue offering “very competitive” rewards on USDC: “We intend to proceed with our incentives, which are a distinctive element,” he emphasized, explaining how many users choose Coinbase precisely for this characteristic.
The company also specified that it provides access to USDC entirely issued by third parties, making clear the separation between the platform activity and the issuance activity. In practice, Coinbase merely distributes interest — technically defined as “rewards” — without the legal responsibility of the primary issuer.
How does the programmed reward on USDC and PYUSD work?
Currently, Coinbase compensates deposits in USDC with an annual yield of 4.1%, paid directly to the user’s balance. PayPal, through PYUSD, offers instead a reward of 3.7% annually via a partnership with Paxos.
It is crucial to emphasize that these “rewards” are not classified as formal investment instruments. They are issued based on the balance held on the platform, without state guarantee.
How does the scenario change for crypto exchange, investors, and payment company?
The passage of the GENIUS Act creates a very strong precedent. On one hand, it puts a brake on issuers, preventing them from offering yields and distorting the nature of stablecoins; on the other hand, it leaves doors open for operators who use third-party stablecoins to retain users and surpass the competition.
The major exchanges like Coinbase or the giants of digital payments like PayPal can thus continue to “reward” their customers, provided they are not directly responsible for the issuance of the underlying token.
For US investors, the possibility remains to obtain significant returns on stablecoins held on the platform, even if the nature and security of these bonuses will always depend on the companies’ policies themselves and the evolving legal framework.
Are there risks or warnings for users and platforms?
Yes: the regulatory maneuver could accelerate the consolidation of the market into a few large players capable of structuring rewards “by design” on stablecoins issued by third parties. However, the main risk is a future regulatory change that also closes this loophole.
Another critical issue: the reward offered is not guaranteed by federal insurance (like the FDIC), nor is it immune to unilateral revisions by the platform. Those who maintain large volumes of stablecoin for the rewards must therefore closely monitor legal updates and company policies.
What happens now: can everything change?
The future of interessi sulle stablecoin in the United States will depend both on regulatory moves and on the ability of platforms like Coinbase and PayPal to maintain these programs without encountering new limitations. The balance achieved is delicate: the GENIUS Act has so far targeted producers, but the resilience of multi-platform operators shows how DeFi and major exchanges manage to reinvent the reward without breaking the law.
American users can still take advantage of these incentives, but constantly monitoring regulations and policy changes remains essential. Everything can change in the coming weeks: with a market in constant evolution and the pressure from policymakers, the game on stablecoins and their yields is far from over. Follow the main platforms and their communities to stay updated on the next moves.