Stablecoin Yield Ban Proposed to Limit Interest on Held Coins

The U.S. Senate has released a draft amendment to the GENIUS Act that could stop stablecoin holders from earning passive interest. The proposal focuses on how digital assets create rewards for investors.

Instead of earning interest just for holding stablecoins, rewards would be allowed only for active participation, like trading, staking, or providing liquidity.

What the Crypto Draft Says

The bill aims to separate passive holding from active use. Lawmakers want to limit simple yield farming strategies that let investors earn interest without taking on much risk.

According to the draft, digital asset providers would no longer pay automatic yields on stablecoins held in wallets. Instead, users would need to engage in activities that support the network or market. Like staking tokens or participating in liquidity pools.

Why the Change Is Proposed

The amendment responds to issues from the banking sector. Groups like the American Bankers Association see yield-bearing stablecoins as a threat to traditional bank deposits. By limiting passive income, the bill could help level the playing field between crypto and banks.

Supporters also hope that the change will encourage more DeFi activity. Making users choose staking and liquidity provision instead of simply holding coins.

2026 Crypto Regulation

This stablecoin yield ban is part of a bigger wave of crypto regulations in 2026, with markups and hearings ongoing. Lawmakers are actively reviewing how digital assets interact with financial systems.

The bill reflects bipartisan negotiation, with legislators balancing innovation with risk management. They aim to protect consumers and the traditional banking system while still allowing crypto markets to grow.

Potential Impact on Investors

If the amendment passes, stablecoin holders could see lower returns from passive wallets. Investors who depend on low-risk yield farming may need to explore other strategies, like staking, trading or providing liquidity.

DeFi platforms could benefit if more users shift toward active participation. Meanwhile, banks may feel less competitive pressure from crypto interest schemes.

The stablecoin yield ban is still under review, and changes are possible before the final vote. Investors and industry observers are watching closely, as this could reshape the stablecoin landscape in the United States.