---
type: claim
title: GENIUS Act stablecoin yield prohibition creates structural tension with DeFi savings models
domain: internet-finance
confidence: proven
date_claimed: 2025-03-18
source: "GENIUS Act (H.R. 1488, Section 4(c)); K&L Gates regulatory analysis"
depends_on:
  - genius-act-establishes-payment-stablecoins-as-non-securities-under-federal-law
---

The GENIUS Act explicitly prohibits payment stablecoins from paying yield directly to holders (Section 4(c)). This statutory prohibition is **proven** — it is explicit in the law.

The market implications create structural tension with DeFi savings protocols:

- Protocols like Aave, Compound, and Maker offer yield on stablecoin deposits
- Users must choose between regulatory-compliant payment stablecoins (no yield) and DeFi yield opportunities
- This may bifurcate the stablecoin market into payment rails vs. savings instruments

**Note on market speculation**: While the yield prohibition itself is statutory fact, the extent and nature of market bifurcation is speculative and depends on how DeFi protocols, users, and regulators respond to the new framework.

Potential outcomes:
- Compliant stablecoins dominate payment use cases; non-compliant tokens serve savings
- Wrapper protocols emerge to enable yield without violating the prohibition
- Regulatory arbitrage between jurisdictions

## Relevant Notes

- [[genius-act-establishes-payment-stablecoins-as-non-securities-under-federal-law]]
- [[DeFi protocols enable permissionless financial services]]