Prying

Stablecoins: Who captures your yields?

Every dollar you hold is generating interest for someone. If you are not earning the yield on your dollar, you are funding someone else's business somewhere along the chain. With the introduction of stablecoins (i.e., tokens pegged to the dollar), the competition for your yields has intensified as the financial infrastructure has also become more open.

As companies tussle for your yield, the US government has also stepped in to forbid stablecoin issuers from paying you the yields coming from your coins. This has been the playing field since July 2025, and it is telling that the law specifies who is legally permitted to be the one paying rather than whether you should be paid.

This page follows the same Treasury-bill interest through five structures to see where it stops, and works back through how an industry that set out to build a dollar needing no bank ended up with five different ways of arguing about a bank's interest payment.

Why all of them are dollars

Money has three jobs: a medium of exchange, a unit of account, and a store of value. Nothing requires a currency to do all three, but a currency that does is hard to compete with. The dollar does all three at a scale that nothing else matches.

99%

of stablecoin in circulation is denominated in US dollars, with three major issuers dominating the supply.

USDT (Tether) ~$186B

Tether, the company issuing USDT, keeps the reserve interest itself. Of the five structures traced here, it is the only one where the money simply stops with the issuer rather than being routed onward.

USDC (Circle) ~$75B

Circle, the company issuing USDC, cannot pay holders directly under the same law as every issuer here. Its answer, traced below, is to pay a distributor instead, and the distributor is Coinbase.

USDS and DAI (Sky) ~$12.6B

Sky, formerly MakerDAO, has no company behind it in the ordinary sense. It is run by a vote of its own governance token holders, who decide how much of this reserve's interest reaches the people actually holding USDS.

Other dollar-pegged ~$38B

A long tail of smaller issuers, each facing the same decision as the three above: keep the interest, hand it to a distributor, or let governance decide. This figure is a computed remainder rather than a sum of named issuers.

  • USD1 (World Liberty Financial) ~$4.0B
  • USDe (Ethena) ~$3.9B
  • USDG (Global Dollar) ~$3.4B
  • PYUSD (PayPal) ~$2.8B
  • BUIDL (BlackRock) ~$2.7B

The five above are the largest of that long tail, and each is still a fraction of Tether or Circle's size. Dozens of smaller issuers, most too small to name individually, make up the rest.

Non-dollar denominated $674M to $774M, depending on scope

About 0.2 percent of total stablecoin supply. Almost all of it is euro-denominated.

  • EURC (Circle) ~$430M The largest, at roughly half the euro segment. Circle issues it and Coinbase is the named reseller, the same arrangement traced for USDC below.
  • EURCV (Société Générale-FORGE) ~$138M The second-largest, issued by a French bank rather than a crypto-native firm.
  • EURI (Banking Circle) ~$51M Launched with no supply at the start of 2026 and grew to become the third-largest euro-pegged stablecoin by year end.
  • The rest The remainder Several smaller MiCA-compliant issuers split what is left.

Sources disagree Sources disagree on scope. $673.9 million covers only the eight stablecoins meeting the EU's MiCA compliance rules as of mid-2026. A separate count of "euro stablecoins" more broadly puts the figure at $774.2 million. Both are cited below rather than reconciled.

~$313 billion total, August 2026. CoinLaw, on total supply and issuer share Bitcoin Foundation, on the total (secondary)

The demand was already dollar demand

88% of foreign exchange trades had the dollar on one side, in the 2022 survey

The world already ran on dollars before Bitcoin was even invented. It is the currency that has established itself as the safe haven after World War II, and the currency that facilitates global trade in the modern age. A token pegged to it inherits the existing trust and demand rather than having to build it from scratch.

BIS, on turnover by currency

Only America issues enough short-term debt

$1.2T trades in US Treasury debt on an average day, more than any other government bond market in the world

A reserve is only as good as its liquidity depth. Only US Treasury bills have the scale to absorb billions of dollars of global daily trade. The GENIUS Act wrote this into law by only allowing Treasury bills of ninety-three days or less among the eight things a reserve may hold.

SIFMA, on Treasury trading volume and outstanding debt Journal of International Economic Law, on stablecoin demand for bills

It only works when rates are positive

3.8% the yield on a three-month Treasury bill, which continues funding this business

The American government must continue making good on its interest payments for this business to survive. T-Bill rates have never been negative at issuance, nor are they always the highest across currencies, but people continue to buy them because they believe the world's largest superpower will not default.

Trading Economics, on the current three-month bill yield Cornell Law School, on note and bond pricing rules

Why fix something that isn't broken

17th largest holder of US government debt worldwide, a rank Tether holds alone, ahead of Germany and South Korea

As users were already familiar with dollars, the easiest path for crypto adoption was to quote everything in dollars. Market liquidity formed around the dollar, which forced any other currency to justify why liquidity should move away from the default. Tokenization expanded where and how dollars can be used without overturning existing power structures.

Yahoo Finance, on Tether's Treasury holdings ranking White House, on the reserve rules

How it got here

Five stages, 2014 to today. Each stage changed three things at once: what you were trusting, what happens when the trust is misplaced, and what the tokenized dollar was pitched as. The chart plots all five in one view. The cards below walk through each stage in full.

What or who was backing the tokenized dollar?

No verifiable reserve

Cryptocurrency collateral

Cryptocurrency, partly bank-backed

Dollars in a bank account

Government debt, via regulated firms

Trust in the government

Decentralized alternatives that sidestepped the banks mostly evaporated, especially given the blowback from the Terra/UST collapse. Reserves gradually shifted from pure cryptocurrency baskets to increasingly holding US government debt instead. Tether is the exception, still keeping a portion of its reserves in bitcoin and gold; every other structure traced here is now primarily backed by government debt too, USDY included.

The proxy dollar

2014 to 2017

Before the rulebook

What changed Before this, cryptocurrencies traded against each other with no dollar-denominated anchor nor any easy way to exchange hands.

What you were trusting

One company's word that the dollars are there.

What could actually hurt you

Tether's reserve might not be what it claims, and you would not find out until a settlement years later.

What it was sold as

A dollar that never waits for the bank to open.

November 2014 Tether launches Set the model that wins: a company holds your dollars at a bank and keeps what it earns. Dollars in a bank account

Realcoin renamed itself Tether. A company takes your dollars, issues you a token, holds the dollars at a bank, and keeps whatever they earn. That is the whole design. Everything for the next decade is either an attempt to escape it or an attempt to make it accountable.

Wikipedia, on the Realcoin rename

What ended it The discomfort of needing to trust one company's word, when the whole point was never needing anyone's permission.

Two answers compete

2017 to 2020

Before the rulebook

What changed The question stops being how to make a tokenized dollar and becomes whether it needs a company at all. Two incompatible answers get built at once.

What you were trusting

Either DAI's collateral, visible on-chain with code that liquidates it automatically, or USDC's report from an auditor backed by a named bank.

What could actually hurt you

DAI's collateral could fall faster than the code could liquidate it, or USDC's auditor and bank could simply be wrong.

What it was sold as

DAI built a dollar nobody could switch off, USDC built one anyone could verify, and it was DAI's version that got the excitement.

December 2017 DAI launches Showed a dollar could be issued entirely from cryptocurrency collateral, with no company or bank involved. Cryptocurrency collateral

MakerDAO issued DAI against ether locked in contracts. No reserve account, no issuer to trust, no attestation to publish, because there was nothing off-chain to attest to. The cost was capital: every dollar had to be over-collateralised by an asset that moves violently. Multi-collateral DAI followed in November 2019, widening what could be locked up. This is the branch the rest of the timeline is about, and it is worth being clear that at this point it genuinely worked.

Eco, on the December 2017 launch PR Newswire, on the Multi-Collateral DAI launch

September 2018 USDC launches Made auditability the selling point: USDC is still dollars held at a bank, just with regulated custodians and published reports. Dollars in a bank account

Circle and Coinbase launched USDC through a jointly owned body called Centre, positioned openly as the answer to Tether for institutions. The pitch was not a better peg, it was a better paper trail: regulated custodians, named auditors, published reports. It concedes the bank entirely and competes on how well the bank is watched. That is a different proposition from the one DAI was making, and it is the proposition that scales.

Circle, on founding Centre and launching USDC

June 2019 Facebook announces Libra Turned a market instrument into a question about who is allowed to issue money, and pulled stablecoins into the mainstream conversation for the first time. Dollars in a bank account

Libra was announced with a consortium of large payment companies behind it. Visa, Mastercard and PayPal withdrew under political pressure before it was formally constituted. It was renamed Diem in December 2020, switched its backing from a currency basket to the dollar, never received approval, and was dissolved in January 2022 with its assets sold to Silvergate for around $182 million. It never launched. It matters more than most things that did: the response to it is what built the machinery that later wrote the rules everything else lives under.

CoinDesk, on what Libra changed American Banker, on the wind-down

What ended it The decentralised side found it could not hold the peg cleanly on its own, and reached for the centralised side to help.

Scale, and the bill for it

2020 to 2022

Before the rulebook

What changed These stop being instruments held mostly by traders who watched the mechanics closely, and become infrastructure holding tens of billions, reaching a much larger set of people who may never have looked at what actually backs the one they hold.

What you were trusting

Growth itself. The instruments got large before anyone had settled what stood behind them, and size read as safety.

What could actually hurt you

Three ways to fail at once: an undisclosed reserve, like Tether's; a borrowed one, like DAI's new dependence on someone else's bank account; or nothing at all, like Terra's algorithmic peg.

What it was sold as

Nearly $190 billion sat in stablecoins by May 2022, more than had ever existed before. Too useful to stop, and regulators would have to accommodate what the market had already built.

18 December 2020 MakerDAO deploys the Peg Stability Module Let DAI's collateral basket mix cryptocurrency with a claim on someone else's bank account for the first time. Cryptocurrency, partly bank-backed

MakerDAO deployed the Peg Stability Module, which lets USDC be swapped for newly minted DAI at a fixed rate. It solved a real problem: the peg held much better with it than without it. It also meant that from this point, a meaningful share of the dollar with no company behind it was backed by a claim on a company, holding dollars at a bank, in an account governed by US rules. This is the quietest entry on the timeline and probably the most important. The escape did not fail here. It started paying rent.

Maker governance, on accelerating the launch Blockworks, on the USDC dependency

February and October 2021 New York and the CFTC fine Tether Moved the argument from whether the peg holds to what is actually behind it. Dollars in a bank account

The New York Attorney General settled a twenty-two-month investigation for $18.5 million, requiring Tether and Bitfinex to report their reserves quarterly for two years, after finding the backing of USDT had been misrepresented. In October the CFTC added $41 million, finding that claims USDT was fully backed by dollars were untrue for substantial periods between 2016 and 2018, with sufficient fiat reserves held for only 27.6 percent of the days across that twenty-six month window. Nothing depegged. The token traded at a dollar throughout. A token can hold its price for years while the thing behind it is not what you were told, which is the entire argument for the transparency USDC was selling.

CoinDesk, on the New York settlement CFTC, on the $41 million settlement

November 2021 The President's Working Group recommends bank-only issuance Put "only banks should do this" on the table as the opening position. Trust in the government

The President's Working Group on Financial Markets, with the FDIC and the OCC, recommended that Congress require stablecoin issuers to be insured depository institutions. Not supervised like banks. Actually banks. That is not what eventually passed, and reading the Act against this starting point is the clearest measure of how much ground the industry gained in the four years between.

Sidley Austin, on the report

May 2022 Terra/UST collapses UST's algorithmic peg collapsed in a week, destroying roughly $50 billion and ending the algorithmic-stablecoin category outright. It supplied the case study every later stablecoin law was written against. No verifiable reserve

TerraUSD held its peg through an arbitrage against a second token rather than through anything held anywhere. When it fell below a dollar, defending it meant minting that second token in enormous quantity, which destroyed its price, which broke the arbitrage holding the peg. LUNA went from $62 to fractions of a cent inside a week and roughly $50 billion of market value was destroyed. This was not a liquidity problem better management could have handled. The mechanism worked as designed, and the design was reflexive. Every legislature that wrote stablecoin rules afterwards wrote them with this in front of them, which is why they all specify what must be held.

Chainalysis Federal Reserve research, on the contagion

What ended it Terra answered the question about the third failure mode in a single week, and did it at a scale nobody could argue away.

crypto.news, on the May 2022 peak

The flight to the bank

2022 to 2025

Before the rulebook

What changed Independence stops being the selling point and becomes a liability. Every surviving structure moves toward regulated custody and government debt, including the one built specifically to avoid them.

What you were trusting

Auditors, named custodians, regulated intermediaries, and short-dated government debt.

What could actually hurt you

The bank itself, the layer nobody was examining: a single bank failure, like Silicon Valley Bank's, could knock even a fully backed dollar off its peg.

What it was sold as

Fully backed, transparent, boring on purpose. Boring was now the pitch.

March 2023 Silicon Valley Bank fails, USDC depegs Showed banks carry their own risk: an interest-rate-driven bank run at SVB knocked USDC off its peg, at the exact moment the industry was moving toward banks. Dollars in a bank account

Circle disclosed that $3.3 billion of the cash backing USDC was at Silicon Valley Bank as the bank failed, around 8 percent of reserves. USDC fell to $0.87 within hours and stayed below a dollar all weekend, recovering only once US regulators guaranteed the bank's uninsured deposits. An 8 percent hole produced a 13 percent discount. The token sold on transparency was the one that broke, no code was involved, and what repaired it was an intervention by the system these instruments are often described as an escape from. DAI wobbled alongside it, because of the module deployed in 2020.

CoinDesk Decrypt, on the 87-cent low

18 August 2023 Circle and Coinbase dissolve Centre Split the issuer from its largest distributor, with a revenue share between them. Dollars in a bank account

Circle and Coinbase announced the deal that ended Centre: Circle took sole responsibility for issuing USDC, Coinbase took an equity stake in Circle, and a new collaboration agreement took effect. Centre itself was not formally dissolved until December 2023, but this is where the money on the USDC route starts moving. It was signed almost two years before any law banned issuers from paying holders, which is worth holding onto: the structure was built for commercial reasons, and only later turned out to be the shape the law would leave standing.

Circle 10-K, on the collaboration agreement CryptoSlate, on the dissolution

27 August 2024 MakerDAO becomes Sky, launches USDS Rebuilt the decentralised dollar around government debt and a savings product. Government debt, via regulated firms

MakerDAO announced its rebrand to Sky, unveiling USDS and SKY ahead of their launch on 18 September, with USDS upgradeable one for one from DAI and a separate token, sUSDS, for anyone who deposits USDS to earn yield. Underneath, real-world asset holdings, including tokenised Treasury debt, now generate more than 60 percent of protocol revenue. Follow the line: 2017, collateral in contracts and no bank; 2020, minted against a claim on a bank; 2024, principally backed by government debt held through regulated intermediaries and paying a rate set by a vote. Each step was defensible on its own terms. The destination is a money market fund with a governance process attached.

CoinDesk, on the rebrand BlockEden, on the holdings and the migration (secondary)

November 2024 Paxos launches Global Dollar Network Made reserve income a distribution budget instead of the issuer's margin. Government debt, via regulated firms

Paxos launched Global Dollar Network with Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei and Robinhood, built on returning what Paxos calls virtually all of the rewards to the firms taking part. Every issuer before this competed on trust and reach while keeping the interest. This one competes by not keeping it.

Paxos, on the launch

30 December 2024 MiCA takes effect, USDT delisted in Europe Showed a regulator can force a stablecoin off a continent: Tether skipped EU authorisation, so USDT was delisted from European exchanges. Trust in the government

Europe's main provisions came into force, requiring national authorisation and that a substantial share of reserves sit as deposits at European banks. Tether declined to seek authorisation and USDT was delisted from European spot trading across Coinbase, Crypto.com and Binance. The disagreement underneath is real and unresolved: Europe treats bank deposits as the safe end of a reserve, and Tether argues that trading government debt for exposure to banks makes a reserve less safe. March 2023 is evidence for Tether's side of that.

Finance Magnates, on the delistings Decrypt, on the Coinbase delisting

5 June 2025 Circle IPOs Went public on the NYSE, proof the reserve income was large enough to justify a listing, and put the numbers in public filings for the first time. Dollars in a bank account

Circle listed on the New York Stock Exchange at $31 a share, opened at $69 and closed its first day at $83.23. The price is not the point. The filings are: from here, what the reserve earns and what it costs to keep the token in front of users are line items anyone can read, which is the only reason the figures on the USDC route can be quoted from the company rather than estimated from outside it.

Circle, on the pricing CoinDesk, on the debut CoinDesk, on the closing price

What ended it The GENIUS Act made the flight compulsory, by listing what a reserve is permitted to hold.

The licensed dollar

2025 onward

After the rulebook

What changed The argument about backing is over, settled by law rather than by the market. What you are trusting is no longer a company or a contract, it is a statute and whoever is holding the token for you.

What you were trusting

A statute, a supervisor, and a licensed platform holding your balance.

What could actually hurt you

Not that the dollar breaks, but that the interest moves to places nobody is accountable for it, the way it already has with Stream Finance's curators.

What it was sold as

Safe, legal, compliant. Compliance itself became the pitch.

18 July 2025 The GENIUS Act becomes law Made it law: a reserve must be cash, a bank deposit or Treasury debt, and the issuer cannot pay you interest for holding the token. Trust in the government

Public Law 119-27 requires full backing and limits reserves to eight permitted asset types: cash and Federal Reserve deposits, insured bank deposits, Treasury bills of ninety-three days or less, repurchase agreements, reverse repurchase agreements, qualifying money market funds, other Federal Government-issued assets the regulator approves, and tokenized versions of the above. Read that list against 2017. There is no version of a permitted reserve that does not run through a bank or the Treasury, so the question of whether a dollar could work without them is now answered by statute rather than by the market. Then Section 4(a)(11): no permitted payment stablecoin issuer or foreign payment stablecoin issuer shall pay the holder of any payment stablecoin any form of interest or yield, whether in cash, tokens or other consideration, solely in connection with the holding, use or retention of the stablecoin. Two words carry the weight. It binds the issuer, and it bites only where the payment is solely for holding.

Public Law 119-27, full text White House, on the reserve rules

November 2025 Stream Finance loses $93 million xUSD's backing was never verifiable: a single external manager ran leveraged positions off-chain, with no multisig over the capital and no attestation tying the token to what backed it. An ETH crash on 10 October 2025 liquidated those positions and lost $93 million. No verifiable reserve

Stream Finance's xUSD was not backed by transparent, on-chain collateral the way DAI is. Deposits funded leveraged positions run by a single external manager, off-chain, with no multisig over the capital, no published custody arrangement, and no live attestation tying circulating xUSD to what actually backed it. Deposits were recursively re-collateralised across platforms, turning roughly $1 of capital into $3 to $4 of deployed exposure. An ETH crash on 10 October 2025 liquidated those leveraged positions, and the manager disclosed a $93 million loss on 4 November. Its tokenized dollar fell 77 percent within a day and 87 to 93 percent within a week, and because vault managers had routed depositors into it, roughly $285 million of bad debt surfaced, led by TelosC ($123.64 million) and Elixir Network ($68 million, lent through private Morpho vaults), with MEV Capital, Varlamore and Re7 Labs among the rest. No stablecoin issuer failed here. That is the point. The appetite for a dollar that pays does not disappear when the issuer is forbidden to satisfy it. It relocates to whatever sits next to the coin, and that place has none of the reserve rules the Act had just written.

CoinDesk, on the $93 million BlockEden, on the spread

25 February 2026 OCC proposes rule closing the distributor gap Proposed banning issuers from paying a distributor to pass interest to you, but left the rule unfinished. Trust in the government

The OCC proposed a rule that would presume any coordinated arrangement between an issuer and an affiliate or related party to pay holders is a prohibited yield arrangement, with the burden falling on the parties to show it is not connected to holding the coin. The comment period closed on 1 May 2026. No final rule has been issued, so the legal position of the USDC and Open USD routes is open rather than merely contested.

Sidley Austin, on the proposal Gibson Dunn, on the wider framework

30 June 2026 Open USD launches Scaled Circle and Coinbase's own revenue-share arrangement from one company to a consortium of 140+ firms including Visa and Mastercard. Government debt, via regulated firms

Open USD launched with more than 140 firms behind it, including Visa, Mastercard, Stripe, BlackRock, BNY and Coinbase, on the same model of redistributing reserve income to the firms holding the token for customers. Circle's shares fell about 17 percent in a day. The reaction is the useful part: the market read this not as a compliance detail but as an attack on the economics of keeping the interest, mounted by firms large enough to make it stick. Note who is on that list. The dollar that needed no bank is now being issued by a consortium of card networks, custody banks and asset managers.

CoinDesk Fortune Coinpaprika, on the backers and the share-price drop

What is still open Who is allowed to pay you. The Act names the issuer and nobody else, the OCC has proposed closing that gap and has not, and different structures are trying different answers in the meantime.

Who gets paid your interest

Every one of these five structures draws on the same kind of Treasury-bill interest, and the law only bars the issuer from paying it to you directly. This table tracks where that interest actually lands, across four possible recipients. Only one column marked YOU reads yes without qualification, and it belongs to the structure that stopped being a stablecoin. The other four split between one outright no and three that depend on where you hold it. Click a row to trace it.
Structure The issuer The company or protocol that issued the token. A distributor An exchange, broker or wallet holding the token for its own customers. Governance Token holders voting on what the protocol does with its revenue. You The person actually holding the token.
Sold as a dollar A token you are meant to treat as cash, with no suggestion it pays you anything.
Paid Paid Not paid Conditional
Paid Not paid Not paid Not paid
Sold as a dollar that a community governs A token described as decentralised, issued by a protocol rather than a company.
Not paid Not paid Paid Conditional
Sold as a dollar that earns A token sold on the basis that holding it pays you something.
Not paid Not paid Not paid Paid
Paid Paid Not paid Conditional

USDC Circle

Reaches you, conditionally

The largest regulated tokenized dollar. Circle is barred from paying you, so the payment happens one company further out.

Where the interest is now

The Treasury bill

Reached you

$0

Remaining hops

4

01 Who is holding it

The Treasury bill

Short-term debt issued by the US government, most of it repaid within three months. The GENIUS Act limits what a reserve may hold to eight things, and this is the main one.

Pays interest to whoever holds it. Every one of the five routes traced here starts at this same Treasury bill.

02 Who is holding it

The reserve fund

A government money market fund holding those bills, kept separate from the issuer that relies on it.

Interest accrues here first. The fund files its holdings with the SEC daily, and Circle publishes a monthly report on the reserve from Deloitte. That report is an agreed-upon-procedures examination, which is a narrower exercise than an audit.

03 Who is holding it

Circle

The issuer of USDC, and the party the yield ban is written about.

Keeps a share, then pays a large part of the rest out to the companies that put USDC in front of users. In 2025 those distribution costs came to $1.4 billion, against $924.5 million the year before.

52%

of Circle's 2025 revenue and reserve income went straight back out again as distribution costs. This is the only route where the split is disclosed at all, because Circle is the only one of the five that has to file.

$1.4 billion Paid to Coinbase and other distribution partners, up from $924.5 million in 2024

$1.3 billion Left with Circle, before staff, infrastructure and everything else it costs to run

Circle 10-K and full-year 2025 results

Section 4(a)(11) Circle is the issuer, which is exactly who the ban targets. No matter how much of this interest it holds, it cannot pay any of it to you directly.

04 Who is holding it

Coinbase

Not the issuer. An exchange that distributes USDC and holds a large amount of it on behalf of its own customers.

Receives an allocation on the USDC held on its platform, after Circle's own retention, plus half of what is left after other approved participants are paid. What it does with that is its own decision.

Section 4(a)(11) And this is the hinge. Coinbase is not the issuer, so the sentence banning payment does not name it. One step along the chain, the same interest becomes payable. That single step is what the OCC has proposed closing, and has not.

You Where it ends up

Only in a Coinbase account

Reaches you, conditionally

Coinbase pays a rate it sets on USDC held in a Coinbase account. Move the identical token to a wallet you control and the payments stop. Nothing about the token changed. The reserve behind it is the same reserve, earning the same interest from the same bills. What changed is which company is holding it for you, and whether that company chose to pass any of the interest on.

Stop 1 of 5

Where the law sits, for the whole route

Section 4(a)(11) binds Circle.

The ban is written about the issuer. Circle cannot pay you interest for holding USDC. It says nothing about anyone else paying you, and the money reaching Coinbase customers is paid by Coinbase.

Not settled Whether that distinction holds is an open question, not settled law. The OCC proposed a rule on 25 February 2026 that would treat a coordinated arrangement between an issuer and an affiliate or related party to pay holders as prohibited unless the parties can show otherwise. Comments closed on 1 May 2026 and no final rule has been issued.

Circle 10-K, on the Coinbase agreement and distribution costs Circle, on 2025 revenue and reserve income Sidley Austin, on the proposed OCC rule

USDT Tether

Never reaches you

The largest tokenized dollar of all, and the only one of the five where the interest simply stops at the issuer.

Where the interest is now

The Treasury bill

Reached you

$0

Remaining hops

3

01 Who is holding it

The Treasury bill

Short-term debt issued by the US government, most of it repaid within three months. The GENIUS Act limits what a reserve may hold to eight things, and this is the main one.

Pays interest to whoever holds it. Every one of the five routes traced here starts at this same Treasury bill.

02 Who is holding it

Tether's reserve

A wider mix than the others. Roughly 61 percent Treasury bills, plus $18.8 billion of gold, $5.8 billion of bitcoin, and secured loans.

Earns interest on the bills, and gains or loses on the rest. Diversification is offered as prudence, and it also means part of what stands behind the token is an asset that can fall.

03 Who is holding it

Tether

The issuer, reporting roughly $189.8 billion of USDT in circulation against about $191.8 billion of assets in May 2026.

Keeps the interest. There is no distributor being paid out of this and no holder being paid either. Reserves are reported quarterly by BDO Italia, Tether's own auditor. Circle reports monthly, by comparison.

Section 4(a)(11) Nothing to test here. The chain ends at the issuer, so there is no arrangement for the ban to catch and no gap for one to route through. The plainest structure of the five is also the only one the rule has nothing to say about.

You Where it ends up

It does not reach you

Never reaches you

This is the plainest arrangement of the five, and the one closest to what most people already assume a stablecoin is. You hand over a dollar, you get a token, the token is worth a dollar, and the interest on the dollar belongs to the company holding it. Nothing is being routed anywhere, because nothing needs to be.

Stop 1 of 4

Where the law sits, for the whole route

Section 4(a)(11) is not the binding constraint here.

Tether has not taken up US permitted-issuer status, so the fight over USDT has happened under other regimes. Under the EU rules Tether declined authorisation, and USDT was delisted from European spot trading on Coinbase, Crypto.com and Binance across 2024 and 2025.

Not settled The disagreement underneath that is real and unresolved. Europe requires a large share of reserves to sit as deposits at European banks. Tether's position is that this makes a reserve less safe rather than more, by trading government debt for exposure to a bank failing. Two regulators looking at the same reserve do not agree on what safe means.

Tether, on its Q2 2026 reserve attestation Finance Magnates, on the European delistings Decrypt, on the Coinbase delisting

USDS and DAI Sky, formerly MakerDAO

Reaches you, conditionally

A dollar with no company behind it, whose largest source of revenue is now the same Treasury bills as everyone else.

Where the interest is now

The Treasury bill

Reached you

$0

Remaining hops

4

01 Who is holding it

The Treasury bill

Short-term debt issued by the US government, most of it repaid within three months. The GENIUS Act limits what a reserve may hold to eight things, and this is the main one.

Pays interest to whoever holds it. Every one of the five routes traced here starts at this same Treasury bill.

02 Who is holding it

Tokenised Treasury holdings

Government debt held through regulated intermediaries and represented on-chain, so a protocol with no bank account can hold it.

Real-world asset holdings, including these Treasury bills, now generate more than 60 percent of the protocol's total revenue. DAI is marketed as backed by cryptocurrency, but in large part it is now backed by the same Treasury bills as USDC, the token marketed as backed by dollars.

03 Who is holding it

The protocol

The contracts holding the collateral and issuing the token. There is no company here to keep the money.

Revenue accumulates to the protocol rather than to an owner. Which is not the same as accumulating to you.

04 Who is holding it

Governance

Holders of SKY, the governance token that replaced MKR, voting on what the protocol does with its revenue.

Decides the split: how much is retained as a buffer, how much funds the savings rate, how much goes elsewhere. The decision can be revisited at any time by another vote.

Section 4(a)(11) The ban is addressed to issuers, and there is no issuer standing here to receive it. What decides whether you are paid is not a rule but a vote, which can go the other way next time without anything having gone wrong.

You Where it ends up

Only if you stake it

Reaches you, conditionally

Holding USDS in your own wallet pays you nothing. To be paid you have to supply it into a separate savings contract and hold a different token representing that deposit. The rate on it is not a property of the dollar you were holding. It is a figure governance sets and governance can change. There is also a loop worth noticing here: the module that keeps this dollar at a dollar lets it be minted one-for-one against USDC, so part of what stands behind the decentralised dollar is a claim on the reserve at the top of the USDC route.

Stop 1 of 5

Where the law sits, for the whole route

Section 4(a)(11) is written about issuers, and there is no issuer to bind.

Nothing here is a permitted payment stablecoin, and nobody has applied to be one. The rule finds no company at the address it was sent to. The routing device is not a legal structure at all, it is that the payment is a separate opt-in product rather than a feature of the token.

Not settled How US rules end up treating a protocol that behaves like an issuer without being one has not been answered. The figures here are also drawn from secondary reporting rather than from the protocol's own accounts.

Sky, on the savings rate and the separate deposit token BlockEden, on the migration, holdings and the peg module (secondary)

USDY Ondo

Reaches you, directly

The only one of the five that reaches the holder, and it does so by not being a stablecoin at all.

Where the interest is now

The Treasury bill

Reached you

$0

Remaining hops

3

01 Who is holding it

The Treasury bill

Short-term debt issued by the US government, most of it repaid within three months. The GENIUS Act limits what a reserve may hold to eight things, and this is the main one.

Pays interest to whoever holds it. Every one of the five routes traced here starts at this same Treasury bill.

02 Who is holding it

The company in the middle

Ondo USDY LLC, a company set up to hold the assets and nothing else, structured so that trouble at Ondo itself should not reach what it holds.

Holds short-term Treasuries and bank deposits, and owes the proceeds onward. It exists to be the borrower, not to make its own decisions.

03 Who is holding it

The note

What you actually hold. Not a stablecoin, but a secured debt instrument issued by that company, with the token acting as evidence of the debt.

Accrues interest to whoever holds the token, at a rate that moves with the market, reported around 3.55 percent as of August 2026. Nothing has to be voted on or passed along for this to happen.

Section 4(a)(11) The ban never reaches this. It applies to issuers of payment stablecoins, and this is not one. No distributor was needed and no vote was needed, because the instrument simply stepped outside the category the rule governs.

You Where it ends up

It reaches you

Reaches you, directly

The only route that reaches you, and the reason it works is the reason it is not for most people. What you are holding is a loan to a company, not a dollar. You are a creditor, ranking behind whatever the collateral does not cover. Being legally allowed to pay you is exactly why it does not have to be worth a dollar. This is also closed to US persons, so the structure that solves the problem is not available in the country whose rules created it.

Stop 1 of 4

Where the law sits, for the whole route

Section 4(a)(11) does not reach this.

The ban applies to issuers of payment stablecoins. USDY is not one, and is not marketed as one. The route around the ban is the legal form of the thing itself: call it debt, and the rule written about dollars has nothing to say.

Not settled A security has its own rules rather than no rules, which is why the offer is restricted by jurisdiction. Nothing about this structure has been tested by a failure yet.

Ondo, on the structure and the rate

USDG and Open USD Paxos, and a consortium

Reaches you, conditionally

The same device as the USDC route, run deliberately: pay the distributors, and let them decide whether you see any of it.

Where the interest is now

The Treasury bill

Reached you

$0

Remaining hops

4

01 Who is holding it

The Treasury bill

Short-term debt issued by the US government, most of it repaid within three months. The GENIUS Act limits what a reserve may hold to eight things, and this is the main one.

Pays interest to whoever holds it. Every one of the five routes traced here starts at this same Treasury bill.

02 Who is holding it

The reserve

Held for Paxos Digital Singapore, which issues USDG out of Singapore rather than the United States.

Earns interest, reported through a monthly independent attestation rather than Paxos's own word for it. KPMG LLP has prepared that attestation since February 2026, taking over from Enrome LLP.

03 Who is holding it

Paxos

The issuer, and the party a yield ban would be written about.

Keeps very little of it. In its own words the network returns virtually all of the rewards to the firms taking part, which inverts the arrangement the other four issuers traced on this page run on.

Section 4(a)(11) Paxos is the issuer, so Paxos is who the ban names, and Paxos is keeping almost none of it. Passing it on is not a way of avoiding the rule here. It is the entire commercial model, and the rule is what makes that model worth running.

04 Who is holding it

The network partners

The exchanges, brokers and wallets that hold the token for their own customers. Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos and Robinhood at the start, with a much larger group behind the Open USD launch in June 2026 including Visa, Mastercard, Stripe, BlackRock, BNY and Coinbase.

Receive the interest in proportion to what they bring to the network. What each does with it after that is its own commercial decision.

Section 4(a)(11) The same hinge as the USDC route, reached deliberately rather than inherited. None of these firms is the issuer, so none of them is named, so all of them may pay you. Whether any actually does is a commercial question and not a legal one.

You Where it ends up

Your platform decides

Reaches you, conditionally

This is the same shape as the USDC route, which is the point worth sitting with. In both, the issuer is barred from paying you and pays a distributor instead. The difference is not whether a distributor is being paid, it is how much and how openly. USDC is sold as a plain dollar and USDG is sold on the strength of paying, and structurally they are the same manoeuvre. Whether you are paid is a decision your platform makes, not something the token guarantees.

Stop 1 of 5

Where the law sits, for the whole route

Section 4(a)(11) binds the issuer, and the payer is not the issuer.

The economics are built around the gap rather than merely benefiting from it. Moving the payment to the distributor is the product.

Not settled The proposed OCC rule points squarely at coordinated arrangements of this kind, and it is proposed rather than final. The announcement of the larger consortium in June 2026 moved Circle's share price about 17 percent in a day, which says the market reads this as a direct competitive threat rather than a technicality.

Paxos, on returning rewards to participants Paxos, on the monthly attestation and current auditor CoinDesk, on the Open USD consortium Coinpaprika, on the Open USD backers and Circle's share price