Overview
- The GENIUS Act, passed in July 2025, bars issuers from paying direct interest on payment stablecoins and requires 1:1 reserves, AML controls, and regular attestations.
- U.S. agencies including the OCC, Treasury, FDIC, FinCEN, and OFAC are drafting or proposing rules in 2026 to define enforcement, sanctions checks, and how the interest ban is applied.
- Circle and platforms such as Coinbase are moving to transaction‑based rewards, loyalty programs, and third‑party distributor incentives as alternatives while regulators clarify what counts as prohibited interest.
- Issuers still earn returns on the reserve assets that back tokens, and USDC supply stayed strong at roughly $77 billion at the end of Q1 2026, preserving issuer economics even without holder yield.
- How regulators rule on distributor rewards will affect consumer offers, bank competition, and whether stablecoins become a settlement rail for tokenized finance and institutional payments.