Stablecoin interest ban to last five years as dollar grip tightens
The world’s largest unregulated stablecoin issuer already rivals Goldman Sachs in profit, as yield rules stay frozen
Stablecoin issuers on both sides of the Atlantic will not be allowed to pay interest to holders for at least the next five years, cementing their role as payment tools rather than savings instruments and allowing yields to flow quietly but lucratively to the issuers themselves.
The regulatory walls are now firmly in place. Both the EU’s Markets in Crypto-Assets Regulation (MiCA) and the US GENIUS Act explicitly prohibit stablecoin issuers from passing interest to holders. As the market matures, the question of who captures that yield is becoming impossible to ignore.
“If we could, we would love to pay interest, but we can’t,” said Simon Seiter, chief financial and product officer of AllUnity, Europe’s first regulated stablecoin issuer. “With both MiCA and the GENIUS Act basically having that framed, I think it’s impossible in the next five years to change it.”
He said the yield flows to the issuers, just as banks earn interest without passing it all on to depositors.
“That’s fine, as long as you provide value,” he said. “For payment mechanisms, people pay a lot, especially on the merchant side. If we only take the yield, they say, ‘Please take my money. I will use you just to save the fees on the payment side.’”
How lucrative that yield can be was illustrated bluntly by Seiter.
In 2024, Tether, the world’s largest stablecoin issuer with around 150 employees, generated approximately $14 billion in profit, roughly matching Goldman Sachs, which employs 65,000 people, in the same year.
Elliot Hentov, chief macro policy strategist at State Street Global Advisors, said the number-one issue the American Banking Association raised with US government officials in 2025 was stablecoin yields and rewards.
“The path is hard. If I’m a regulator, it just doesn’t jive with my existing system, unless I completely redesign everything else,” Hentov said. “There may be back doors, reward programs and so forth. But I still struggle to see that happening in the near term.”
Seiter said regulated issuers such as AllUnity cannot compete with unregulated rivals on decentralized finance (DeFi) yields because their reserve structures are closer to those of money market funds. For merchants, the savings on payment fees alone are sufficient incentive to adopt stablecoins even without yield.
Trump’s debt lifeline
The discussion took place at the Digital Assets Forum 2026, organized by the European Blockchain Convention in London. It was moderated by Mads Clemmensen, digital assets lead at Danske Bank.
Speakers from JPMorgan, State Street Global Advisors, Zero Hash, and Innovating Capital joined Seiter to examine whether stablecoins are becoming competitors to money markets.
The numbers are stark. Total stablecoin supply currently stands at roughly $170 billion, of which euro-denominated stablecoins account for only around $600 million. In traditional currency markets, the euro accounts for 20 to 25% of US dollar trading volume.
Seiter said the gap between those two figures measures how aggressively the stablecoin market is driving dollarization.
“Why is Donald Trump regulating stablecoins?” he said. “The GENIUS Act requires issuers to invest in short-term US Treasury bills. Tether was already among the top 50 buyers of US debt in 2024, bigger than the state of Germany. A new buyer group comes into a saturated market and buys your debt, and it becomes significantly less expensive.”
“Stablecoins solve Donald Trump’s short-term liquidity problem, because they make his refinancing cheaper,” he added. “That is geopolitical, and it is not a development that, from a European perspective, has a beautiful future.”
He said the systemic risks embedded in that arrangement are considerable. Tether mixes Bitcoin into its reserves alongside Treasury bills, creating vulnerability during crypto bear markets. If Tether were to fail, ordinary users in emerging markets such as Argentina, who hold USDT (Tether’s dollar-pegged stablecoin) as a store of value, would bear the consequences.
Tether’s newly announced regulated US stablecoin, USAT, will not take effect until 2028, leaving USDT itself unregulated and meaning systemic risk remains largely intact. Tether already holds the 12th-largest position in US government debt.
Rens de Groot, chief commercial officer for Europe at Zero Hash, which provides blockchain infrastructure to banks and brokerages, said the dollar dominance of stablecoins reflects a broader shift in the world order.
“The dollarization of the world gives the Trump administration just another tool of creating financial influence throughout the world,” he said. “Here in the EU, we should be more than aware of this. The supply of stablecoins should be a reflection of real-world economic size.”
Hentov said the risk is most acute in non-dollar economies, where the appeal of holding a dollar-denominated asset is already strong and local banking systems face erosion as a result.
“In non-dollar areas of the world, holding the dollar has a variety of benefits and attractions. You are going to get a hollowing out of the banking sectors, or an erosion of the banking base,” he said. “These are not great options.”
He said the UK is actively reconsidering its stablecoin regulatory framework. The ultimate prize is a non-dollar settlement currency: global equity and bond markets each stand at roughly $100 trillion, and tokenizing even a fraction of those assets would require one.
Emma Lovett, markets digital assets lead at JP Morgan, said the arrival of a major asset manager’s own stablecoin raised the question of whether the buy side would begin transforming its payment infrastructure over the next two to three years.
JP Morgan launched its own deposit token, JPM Coin, in November last year, viewing it primarily as an institutional payment instrument.
Fruit rotting at port
Beyond regulation, the industry faces a structural challenge: a proliferation of competing issuances that risks fragmenting liquidity and deterring corporate adoption.
De Groot said he recently addressed a group of corporate treasurers in Amsterdam for whom fragmentation was a source of genuine alarm.
“We are all crypto natives here. We understand there’s more than one euro stablecoin and more than one USD stablecoin. But those treasurers found it really scary,” he said. “Their consensus was that they hope it will be so interoperable that in the end they will not care, or will not even see, which stablecoin is being used in the back end.”
Seiter drew a parallel with the existing banking system.
“In the existing banking rails, you have a lot of different private money, and you don’t notice. If I send you a bank wire, I have maybe Deutsche Bank money, you have maybe Citibank money. It’s all different money by different issuers, and nobody notices because it’s already integrated,” he said. “For stablecoins, it will be the same in the future.”
De Groot described a customer whose container of tropical fruit was rotting in an African port, waiting for a SWIFT payment that had not arrived.
“He said to me: I’m not interested in blockchain technology. I’m interested in my container of tropical fruit. How are you going to solve that for me?” he said.
“When your payment goes through many correspondent banks, in the end there’s no way of telling which amount will actually arrive at the African port,” he said. “With stablecoins, clients can just log into a public blockchain viewer and see where the cash is. It cannot be anywhere else.”
Anthony Georgiades, founder and general partner of Innovating Capital, a New York-based technology infrastructure fund, said the most meaningful venture capital is now flowing not into new stablecoin issuances but into the invisible infrastructure beneath them.
“A lot of the meaningful investment right now is really going into that invisible layer of backing infrastructure, things like orchestration: who decides in an autonomous fashion when to use stablecoins, and how do I bridge stablecoins across different ecosystems?” he said.
He said the industry would reach true product-market fit only when stablecoins are so embedded that people stop discussing them altogether. He said a core focus of Innovating Capital’s portfolio is to abstract that complexity away so that banks can adopt stablecoins without needing to understand the underlying blockchain architecture.