Whereas Congress strikes ahead with the CLARITY Act, the unfinished battle over how the USA attracts the road between “digital currencies” and “securities” is unfolding within the public eye, and is escalating into a well-known blame sport.
On-line, critics have argued that the invoice’s construction may favor regulated incumbents, and centralized platforms have been accused of secretly supporting changes that might make it more durable for DeFi to compete on a degree enjoying subject.
Though CLARITY is being touted as a market construction invoice, a very powerful battle could also be over distribution.
Stablecoin rewards are turning “holding {dollars}” right into a competing product class, and banks are combating to stop the function from turning into routine exterior the deposit system. Platforms body it as a loyalty profit relatively than curiosity, whereas lawmakers are exploring language that might protect “digital money” whereas proscribing “save and earn” conduct.
Banks are resisting retail stablecoin yields as a result of they compete with the deposit pricing and fee relationships that underpin client banking.
In line with the FDIC’s most up-to-date month-to-month rate of interest cap info dated December 15, 2025, the nationwide rate of interest used within the rate of interest cap framework was 0.39% for financial savings, 0.07% for curiosity checking, and 0.58% for cash market deposit accounts.
In the identical desk, the Treasury’s reference yield for these non-maturity devices was 3.89%.
This hole doesn’t immediately symbolize banks’ income, nevertheless it does quantify the extent to which retail deposit costs can fall under authorities charges when balanced by buyer conduct, bundled providers, and switching frictions.
Stablecoin yields squeeze financial institution deposit charges and expose spreads
Stablecoin rewards shut that distance by giving retail customers an alternate place to carry their greenback balances and providing returns that fall nearer to the quick finish of the curve.
The US Treasury’s each day yield curve sequence reveals 3.88% as of November 28, 2025, with the market money benchmark near the FDIC desk normal of three.89%.
As stablecoin yields strategy that vary, the retail query modifications from “Which financial institution pays probably the most?” to “Why is my money return a lot decrease than the federal government’s rate of interest?”
From a steadiness sheet perspective, the stress is forward-looking as a result of the choice level is the marginal value of funds relatively than the standard common.
As deposits shift from present and financial savings accounts to stablecoin balances, banks can reply by rising deposit charges or substituting funding via wholesale channels.
Each choices will improve your curiosity expense, however the improve might be fast.
In line with the Federal Reserve Financial institution of New York, the collateralized in a single day lending charge is a broad measure of the price of borrowing in a single day money backed by Treasury securities and is the benchmark that kinds the repurchase market and different short-term funding markets utilized by giant monetary corporations.
If the outflow of private deposits causes banks to turn out to be extra reliant on market funds, the costs of their substitutes could comply with coverage rates of interest extra immediately than conventional private deposits.
The retail distribution layer is the place banks see the best strategic threat.
The hidden prices of accelerating dependence on financial institution funds: Why deposit flight issues
In line with Coinbase USDC Rewards Overview, states that this program is a loyalty program sponsored by Coinbase, and that rewards accrue primarily based on balances and reward charges, and aren’t used or loaned by Coinbase. USDC with out buyer directions.
The identical web page states that some areas, together with the US and UK, require a Coinbase One membership to be eligible.
coinbase USDC The product web page states a 3.50% rebate charge. USDC Rewards can be found to Coinbase One members with plans beginning at $4.99 per thirty days.
Despite the fact that the precise reward charge could change over time, such packages show earnings as a default function of holding a cash-like steadiness on a platform that additionally helps transfers and transactions.
This reduces the position of financial institution accounts as the first place to retailer funds.
Banks additionally distinguish between sustained yields and promotional affords. It is because the previous has the potential to reset client expectations, whereas the latter usually behaves extra like advertising and marketing spend.
Binance is working a limited-time marketing campaign associated to its Easy Earn product.
In line with a Binance announcement, one promotion provided a tiered annual curiosity bonus. USDC Versatile merchandise on real-time APR parts.
One other Binance discover states that property deposited into Easy Earn could also be lent to different Binance customers, together with margin and mortgage merchandise.
We additionally notice that redemptions could also be briefly delayed resulting from a excessive quantity of redemption requests.
For banks, this disclosure is vital as a result of it attracts the road between remuneration charges funded by platform economics and financial institution deposits funded inside the supervisory framework.
Nonetheless, each are competing for a similar retail worth.
Stablecoin rewards threaten financial institution deposits and related buyer relationships
Opposition additionally displays the layer of funds and relationships that sit on prime of deposits.
Checking accounts lock in payroll, invoice fee, debit, ACH, and payment statements and assist cross-selling into lending and wealth administration.
Banks threat dropping each their funding and buyer interactions when a portion of their transaction balances migrates to stablecoins held in custodial wallets.
It doesn’t have the identical batch constraints as conventional rails and might settle remittances at any time, making its outflows extra delicate than conventional deposit competitors.
Stablecoins are beginning to regulate how excessive their yields might be, and CLARITY is turning into a automobile for a combat that GENIUS did not settle cleanly.
Though the GENIUS Act’s strategy prohibited issuers from paying curiosity with a view to proceed to outline stablecoins as “digital money,” platforms may nonetheless promote “rewards” that act like yields, shifting aggressive affect into circulation.
Amid criticism of stablecoin rewards, CLARITY debate attracts a line between “yield” and “royalty”
Within the background is a narrower however extra explosive drafting debate. Lawmakers are searching for language that might prohibit curiosity paid only for holding a stablecoin, however enable activity-based incentives framed as funds or loyalty rewards.
This distinction is vital as a result of it shifts the main focus from the issuer to the distributor. Platforms can promote cash-like balances that yield returns near the treasury with out having to label the tokens themselves as “interest-bearing,” however banks argue that it’s functionally deposit curiosity by one other identify.
The end result was an try to cap “maintain and earn” expectations whereas leaving room for “spend and earn” packages, and disclosures designed to stop rewards from being offered as risk-free, bank-style curiosity.
Banks do not observe the unfold between authorities bond yields and a single deposit charge within the quick time period.
It is about holding deposits, repricing deposits, combining various funds, and the way shortly these inputs change if stablecoin rewards keep close to money benchmarks.
The FDIC’s December 15, 2025 schedule requires curiosity checks of 0.07% and financial savings of 0.39%, in comparison with the Treasury’s reference charge of three.89%.
Then again, Coinbase USDC This web page lists a 3.50% reward for Coinbase One members, and Binance’s disclosure describes each the promotional bonus construction and the power to lend Easy Earn property to different customers.
