The Treasury Bills Behind Your Stablecoin Pay 4%. Federal Law Says Your Cut Is Zero.

Update, October 23, 2026: The OCC finalized its GENIUS Act rule on October 21, effective January 18, 2027, and it is softer on “rewards” than the proposal this post described. The agency “determined to eliminate the rebuttable presumption” that would have treated yield routed through an affiliate as a banned payment. It will instead judge each arrangement on its facts. It also refused to grandfather pre-existing rewards programs and refused a safe harbor for small payments. The ban on the issuer paying you interest is unchanged, and Treasury bills still pay about 4% (the 13-week bill was 4.14% on October 22), so the $400 math below stands. The rewards section is rewritten.

If you keep cash in a dollar stablecoin because it settles faster than your bank and the balance never wobbles, fine. Just know what you are handing over.

You are earning nothing on it. Not because rates are low. Because a federal statute says you cannot.

What the Fed just put on the table

On September 24 the Federal Reserve Board asked for public comment on two proposals setting the rules for bank-issued payment stablecoins under the GENIUS Act. The first one is the part that touches your money. Issuers would have to “fully back their stablecoins with certain permissible reserve assets, such as short-term Treasury bills and certain other high-quality, liquid assets.”

So your $10,000 stablecoin balance becomes $10,000 of Treasury bills, sitting in somebody else’s account.

Those bills are not idle. Treasury’s own daily rate sheet for September 25 puts the 4-week bill at a 3.97% coupon equivalent and the 13-week bill at 4.18%.

Now read section 4(a)(11) of the Act: “No permitted payment stablecoin issuer or foreign payment stablecoin issuer shall pay the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin.”

Translation: the reserve earns, you do not. That is the design, not an oversight. Congress built a payment token and wrote the savings account out of it on purpose.

What that costs on $10,000

About $400 a year of Treasury interest, generated by your dollars, that the law forbids from reaching you.

There is no insurance underneath it either. Section 4(e)(1) says payment stablecoins “shall not be backed by the full faith and credit of the United States” or “subject to deposit insurance by the Federal Deposit Insurance Corporation.”

Fed Governor Miran said it in one sentence in a November 2025 speech: “GENIUS Act payment stablecoins do not offer yield and are not backed by federal deposit insurance.”

As a payment rail, that trade is defensible. As a place to park an emergency fund, it is dumb math.

Do this

Hold in a stablecoin only what you are about to spend. Move the rest into an insured savings account, or buy the bills yourself at TreasuryDirect and keep the yield. Our savings calculator will show what a year at zero costs, and the savings hub and best savings accounts pages compare real rates.

If an app dangles “rewards” on a stablecoin balance, read that as a live legal fight rather than a rate. The OCC’s March proposal would have presumed that an issuer paying yield to an affiliate, which then pays holders, was an end run. The final rule dropped that. The OCC says it will “monitor arrangements” and apply the statute to “the facts and circumstances of any particular arrangement.” Translation: the reward keeps paying until a supervisor decides it shouldn’t, and nobody gets a list of what’s allowed. That is a rate with no floor under it. A reward is not interest and it is not insured, whatever the app calls it.

One thing the final rule did settle: the ban “does not apply to deposits,” including tokenized ones. If your bank ever moves your account onto a blockchain, it can still pay you interest.

The timing, for anyone keeping score

Section 20 says the Act takes effect on the earlier of “18 months after the date of enactment” or “120 days after the date on which the primary Federal payment stablecoin regulators issue any final regulations.” It was approved July 18, 2025, so eighteen months lands January 18, 2027.

The big stablecoins in circulation today are not permitted issuers yet, so the ban is not yet biting them. It is the direction of travel, and the Fed’s comment window closes 60 days after its notices hit the Federal Register.

File this away. Just do not confuse a payment token with a savings account while you wait.

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