The Trump administration is quietly studying whether stablecoins — the dollar-pegged digital tokens that have become the backbone of cryptocurrency markets — should be allowed to pay yield to their holders. It’s a deceptively simple question with enormous consequences for banks, money-market funds, and the tens of millions of Americans who park cash in traditional savings accounts.
The revelation came during a White House press briefing on May 22, when Bo Hines, the executive director of the President’s Council of Advisers on Digital Assets, confirmed the administration is actively examining the matter. “We’re looking at it,” Hines said, according to Yahoo Finance. He added that the administration wants to ensure that stablecoin holders “get the best deal possible.”
That’s a sharp departure from the position Congress has taken so far. The GENIUS Act, the Senate’s marquee stablecoin legislation that advanced in May 2025 after a rocky procedural fight, explicitly prohibits stablecoin issuers from paying interest or yield to holders. The bill’s authors — Senators Bill Hagerty, Tim Scott, Kirsten Gillibrand, and Cynthia Lummis — crafted that restriction deliberately, largely to avoid triggering securities-law classification and to protect the traditional banking sector from a new competitor for deposits.
But the White House appears to have other ideas.
The stakes are staggering. Stablecoins currently represent a market worth roughly $245 billion, with Tether’s USDT and Circle’s USDC commanding the vast majority of that total. These tokens are backed by reserves — overwhelmingly U.S. Treasury bills, repurchase agreements, and cash equivalents — that generate meaningful returns. Tether alone reported more than $13 billion in profit in 2024, largely from the interest earned on its reserve assets. Circle, which filed for an IPO in April 2025, disclosed similarly lucrative economics. None of that yield flows to the people actually holding the tokens.
If the prohibition were lifted, stablecoin issuers could pass some of that interest income to holders, effectively turning USDT and USDC into something resembling a high-yield savings account — but one that operates 24 hours a day, settles in seconds, and requires no relationship with a bank. The implications for deposit competition are obvious. And the banking lobby knows it.
The American Bankers Association and the Bank Policy Institute have both voiced concerns about yield-bearing stablecoins, arguing they could siphon deposits away from community banks and regional lenders that depend on stable funding bases. In comment letters and public statements throughout the GENIUS Act’s legislative process, banking groups warned that allowing stablecoin yield would create an uneven playing field — digital tokens offering bank-like returns without bank-like regulation, capital requirements, or FDIC insurance obligations.
Their argument isn’t without merit. Banks fund roughly 70% of their lending through customer deposits, according to Federal Reserve data. A mass migration of even a fraction of those deposits into yield-bearing stablecoins could tighten credit conditions, raise borrowing costs, and introduce new fragility into the financial system. Particularly for smaller institutions.
Yet the counterargument is equally forceful. Right now, the average American savings account pays about 0.45% APY, according to the FDIC’s national rate survey, while the federal funds rate sits above 4.25%. Stablecoin reserves invested in short-term Treasuries earn something close to that policy rate. The gap between what banks pay depositors and what stablecoin reserves actually earn represents an enormous implicit tax on savers — one that yield-bearing stablecoins could dramatically narrow.
Senator Lummis, one of Congress’s most vocal crypto proponents, has acknowledged the tension. During the GENIUS Act’s floor debate, she suggested the yield prohibition could be revisited in future legislation once the regulatory framework matures. The White House study appears to be accelerating that timeline.
Several crypto-native companies are already positioning for the possibility. In recent months, new products have emerged that skirt the current restrictions by structuring yield through DeFi protocols or by offering interest in jurisdictions outside the United States. Figure Markets, the fintech company led by former SoFi CEO Mike Cagney, launched a yield-bearing stablecoin called YLDS earlier in 2025 that is registered as a security with the SEC — a deliberate choice to operate within the existing legal framework rather than wait for Congress to act.
Tether, for its part, has been expanding aggressively. The company announced plans in late May 2025 to launch a new stablecoin product specifically designed for the U.S. market, separate from its flagship USDT token that has historically operated offshore. Whether that product could eventually carry yield depends entirely on how the regulatory picture develops. Circle, meanwhile, has remained publicly committed to the no-yield model, though executives have privately acknowledged that competitive dynamics could force a rethink if the rules change.
The White House’s interest in stablecoin yield also intersects with a broader administration priority: ensuring continued global demand for U.S. Treasuries. Stablecoin issuers have become among the largest buyers of short-term government debt. Tether’s Treasury holdings alone rival those of some mid-sized nations. The administration has recognized that a thriving stablecoin sector effectively exports dollar demand worldwide — every USDT held by a trader in Lagos or São Paulo represents indirect demand for American government bonds.
Allowing yield could turbocharge that dynamic. If stablecoin holders earn interest, the products become more attractive, adoption grows, and issuers need to buy even more Treasuries to back the expanding supply. It’s a virtuous cycle from the Treasury Department’s perspective, particularly at a moment when the federal government faces historically large refinancing needs. The Congressional Budget Office projects the national debt will reach $50 trillion by 2034. Every marginal buyer of Treasuries matters.
Not everyone in the administration is aligned on the question. Treasury Secretary Scott Bessent has emphasized financial stability and the importance of maintaining bank competitiveness in his public remarks on stablecoins. Some officials within the Office of the Comptroller of the Currency have flagged concerns about the supervisory challenges of overseeing yield-bearing instruments issued by entities that aren’t banks. The interagency dynamics are complex.
And there’s the securities-law question. Under current interpretations, a digital token that pays interest to holders looks a lot like an investment contract — which would make it a security under the Howey test. That classification would subject stablecoin issuers to SEC registration requirements, ongoing disclosure obligations, and investor-protection rules that could dramatically increase compliance costs and slow adoption. The GENIUS Act’s yield prohibition was partly designed to avoid this exact problem.
If the White House wants yield-bearing stablecoins without securities classification, it would likely need Congress to create an explicit statutory carve-out — or the SEC would need to issue guidance exempting certain yield-bearing stablecoins from registration. Neither path is simple. SEC Chairman Paul Atkins, a Trump appointee who took office in April 2025, has signaled a more accommodating posture toward digital assets than his predecessor, but he hasn’t specifically addressed the yield question.
The crypto industry’s lobbying apparatus is already mobilizing. The Blockchain Association, Stand With Crypto, and Coinbase’s policy team have all advocated for permitting stablecoin yield, framing it as a consumer-rights issue. Their argument: why should issuers pocket billions in interest income while the holders who actually create the demand for these tokens receive nothing?
It’s a compelling populist pitch. And it resonates with an administration that has made crypto-friendly policy a signature domestic priority, from the establishment of a strategic Bitcoin reserve to the appointment of a dedicated White House crypto czar.
But the practical challenges are real. How would yield be distributed — daily, weekly, on-chain, off-chain? Would holders need to complete KYC verification to receive interest, and if so, how would that work for tokens that trade freely on decentralized exchanges? Would yield-bearing stablecoins be eligible for the same regulatory treatment as non-yield-bearing ones under the GENIUS Act’s framework? These are not hypothetical questions. They’re engineering and legal problems that would need concrete answers before any policy change could take effect.
The timeline is uncertain. The GENIUS Act still needs to pass both chambers of Congress and receive the president’s signature, and the yield prohibition remains embedded in the current text. Hines’s comments suggest the White House may push for amendments during the reconciliation process or signal that it would support a separate legislative vehicle addressing yield. Some Hill staffers have floated the idea of a sunset clause on the yield ban — keeping it in place for two or three years while regulators develop appropriate guardrails, then allowing it to expire.
For now, the study itself is the signal. The fact that the White House is openly considering yield-bearing stablecoins tells the market — and Congress — that the administration doesn’t view the current prohibition as settled policy. It’s an invitation for the industry to make its case, for regulators to sharpen their analysis, and for lawmakers to decide whether protecting bank deposits or empowering digital-dollar innovation is the higher priority.
The answer to that question will shape the future of American money.
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