TechFlow news: On January 25, according to Cointelegraph, industry insiders have warned that if the U.S. Crypto Market Structure Act (CLARITY Act) imposes restrictions on stablecoin yields, it could push capital out of regulated U.S. markets and into offshore, low-transparency financial structures and “synthetic dollar” products.
Colin Butler, Head of Markets at Mega Matrix, stated that prohibiting compliant stablecoins from offering yield to holders would not protect the U.S. financial system; instead, it would marginalize regulated entities and accelerate capital migration beyond regulatory boundaries. Notably, China’s digital yuan already offers interest-bearing functionality, while Singapore, Switzerland, and the UAE are advancing frameworks for interest-bearing digital assets. Banning yield on compliant U.S. dollar-pegged stablecoins could therefore weaken America’s global competitiveness.
Under the already-effective GENIUS Act, payment-focused stablecoins such as USDC must be fully backed by cash or short-term U.S. Treasuries and may not pay interest directly—effectively classifying them as “digital cash.”
