US GENIUS Act Passes, Banning Yield-Bearing Stablecoins
- The US GENIUS Act prohibits issuers from offering yield-bearing stablecoins, impacting both retail and institutional investors.
- Temujin Louie, CEO of Wanchain, argues this legislation protects the competitive edge of money market funds (MMFs) over stablecoins.
- Tokenized MMFs are emerging as alternatives to stablecoins, potentially offering new use cases like margin collateral.
- EY’s Paul Brody noted that tokenized MMFs could attract users due to their ability to offer yields absent in stablecoin holdings.
- In February, the SEC approved the first yield-bearing stablecoin security in the US, called YLDS, which offers a yield of 3.85%.
The GENIUS Act’s ban on yield-bearing stablecoins appears influenced by banking industry lobbying aimed at protecting traditional financial models. As a result, tokenized MMFs may gain traction as they can provide yields while maintaining regulatory compliance.
With the prohibition on yield offerings for stablecoins now in effect, financial institutions may find themselves competing more directly with tokenized MMFs that can offer attractive yields.(Source)
