Yield-bearing dollars

An ordinary stablecoin runs one of the better businesses in finance, with little fanfare. Customers hand over dollars and receive tokens; the issuer parks those dollars in short-dated government debt and keeps the interest. At tens of billions in reserves and meaningful interest rates, that is a very large income stream earned on other people’s money.

A newer class of token asks the obvious question: why does the holder not get that yield?

Two ways to pass on the return

Rebasing increases the number of tokens in your wallet. You go to bed with 1,000 and wake up with slightly more, each still worth a dollar. It is intuitive but awkward for accounting systems and for smart contracts that assume balances only change when you transact.

Price accrual keeps the token count fixed and lets the value climb. One token is worth $1.00 today and $1.04 a year later. This is cleaner for integration and is the model many crypto-native yield products use. The tokenised Treasury funds from large asset managers took the other route: BlackRock’s BUIDL and Franklin Templeton’s BENJI hold a stable $1.00 and pay the yield out as additional tokens.

Why this changes the legal position

A conventional stablecoin argues it is a payment instrument: a digital representation of a dollar, not an investment. The moment a token pays a return derived from underlying assets, that argument becomes difficult. An instrument that takes your money, invests it and pays you the profit is, in most jurisdictions, a security or a fund.

That is why these products behave differently from the stablecoin in a retail wallet. They are frequently restricted to professional or non-United States investors, require identity verification before transfer, and can only move between approved addresses. The transfer restrictions written into the token are a compliance requirement rather than a design flaw.

The GENIUS Act will prohibit permitted payment stablecoin issuers from paying holders interest or yield solely for holding, using or retaining their coins. The OCC’s final implementation rule, announced on 21 October and published on 23 October 2026, takes effect on 18 January 2027. It keeps the issuer prohibition and an anti-evasion rule. Payments through an agent or on the issuer’s behalf can still fall within the ban.

The final OCC text removes the automatic rebuttable presumption in its March draft. That change does not give issuers permission to arrange prohibited payments through another entity. The Federal Reserve’s separate proposal still has its own proposed treatment and remains open for comments until 30 November. Treasury’s earlier issuance proposal had a comment deadline of 19 October and addresses a different part of implementation.

Where it fits

This is the meeting point between stablecoins and tokenised real-world assets. From the crypto side it looks like a stablecoin that pays; from the traditional finance side it looks like a money-market fund with blockchain settlement. Both descriptions are accurate, and the growth has come largely from institutions that want treasury holdings settling in minutes rather than days.

Where it stands

Tokenised Treasury products have grown quickly, led by offerings from large established asset managers rather than crypto-native firms, which is itself the notable development. The open question is whether the two categories stay separate: retail users can see the yield on offer, and pressure to blur the line between a payment token and an investment product will not go away.