The GENIUS Act Banned Yield. DeFi Just Renamed It 'Staking'

The GENIUS Act may have slammed the door shut on interest-bearing payment stablecoins, but the quest for yield didn't get the memo. It just packed its bags, changed its name, and moved into DeFi's guest room. The return is still there—it's just wearing a different outfit and insisting it's not "interest," it's "protocol incentives."

Stefan Muehlbauer, Head of U.S. Government Affairs at CertiK, says the issue remains politically contested. The yield debate is still catching serious heat from banks, not just through the GENIUS Act but also during the recent pileup of the Senate's CLARITY Act market structure bill. The fault line now runs between products that look like interest and products that dress their rewards up as something else—service fees, staking incentives, whatever. Banks are zeroing in on yield that smells like interest, while DeFi degens are busy rebranding returns as "protocol participation rewards." Very different, obviously.

Anton Efimenko, co-founder at 8Blocks, sees the same divide. Under U.S. law, stablecoin issuers can't issue stablecoins with passive yield accrual. Rebasing is basically banned—RIP that era. But here's the loophole energy: there's nothing stopping those very same stablecoins from being deposited into DeFi products that generate yield through staking. If you squint at the structure hard enough, a stablecoin issuer could spin up their own DeFi platform and distribute deposit yield through that layer. It's yield, just with extra steps.

That leaves the U.S. stablecoin market in an awkward spot. Yield remains the strongest product incentive in crypto—people literally choose stablecoins based on who pays them the most to hold their dollars. But in 2026, that yield has to be packaged with more legal asterisks than a celebrity endorsement.

Federal Charters Change the Balance of Power

Federal charters are where the power dynamics are getting spicy. Crypto-native firms are now officially inside the U.S. financial system, and the interesting question is how quickly they can go head-to-head with the institutions that have controlled payments and settlement since your grandparents were born.

Muehlbauer argues this is where the biggest realignment is happening. The granting of national trust bank charters to crypto-native firms like Circle and Paxos has effectively dismantled the walled garden that once protected legacy giants like JPMorgan Chase from outside tech competition. These licenses change who can operate with institutional standing inside the system. By securing federal charters, digital asset issuers gain the official federal imprimatur needed to compete directly for core payment and settlement services. That gives them a path to operational autonomy rather than continued dependence on banking partners.

Fernando Lillo Aranda, Marketing Director at Zoomex, says the key change is that crypto-native firms no longer need to rent legitimacy from incumbent banks. Once a non-bank issuer can operate under a federal framework or an OCC-supervised charter, it's no longer just a tech company begging for banking access. That gives firms like Circle or Paxos clearer standing across payments, custody, and reserve management— they're now directly regulated financial institutions, not outsiders peeking through the window.

At the same time, Lillo Aranda doesn't think this is the moment JPMorgan starts crying into its quarterly earnings report. Incumbents still dominate distribution, balance sheet depth, and client trust—the holy trinity of banking. But the competitive gap has narrowed. Where banks once held all the regulatory toys and crypto firms mainly moved faster on product design, some crypto-native issuers now have both speed AND a seat at the regulatory table. The game has shifted from "can we even participate?" to "who can scale trust and distribution fastest."

Efimenko agrees the market is opening up, but he doesn't think legacy finance is heading to the retirement home just yet. The U.S. stablecoin market is going to be highly competitive, but banks and asset managers still hold the distribution crown. Crypto companies have to spend serious marketing budget to attract investors, while banks already have those investors on auto-deposit. Federal charters give crypto-native issuers more room to operate on their own terms, but banks still control the customer relationships that turn financial products into mass-market products. You can have the best stablecoin in the world, but if no one knows how to buy it outside of DEXs, you're just shouting into the void.

Federal Rules Rise, But the States Are Still in the Room

The GENIUS Act may have established a federal path for stablecoins, but it hasn't erased the state systems that helped define earlier phases of U.S. crypto regulation. What it has done is place them in a more constrained position—like being invited to the party but told to stay in the kitchen.

Muehlbauer says the era of states acting as independent laboratories of innovation is largely over. The market is entering a period of cooperative federalism in which Washington sets the main rules for stablecoin oversight. Although the Wyoming Model and New York's BitLicense endure, they're no longer autonomous. They now function within a federal framework that sets the minimum standards for capital and reserves. The states can still add their own flavor, but they're cooking with ingredients Washington chose.

He also points to a hard limit on how far a state-led route can go. Even successful state-chartered stablecoin issuers face a definitive ceiling. Once volume hits $10 billion, they must transition to primary federal oversight by the OCC. Think of it as the regulatory version of being promoted to the major leagues—except the promotion is mandatory and comes with more paperwork.

That leaves states with a role, but not the leading role they once claimed in crypto policy. They still influence licensing, supervision, and regional experimentation, though the center of gravity now sits in Washington. The states are still in the room, but they've moved from the head of the table to somewhere near the appetizers.

CLARITY Still Has to Solve the Token Question

Stablecoins may now have a federal framework, but the larger question of token classification remains unsettled. That's where the CLARITY Act comes into play—the bill trying to be the grown-up in the room.

Muehlbauer says the bill is designed to address what he calls the security-forever dilemma by updating how U.S. law treats tokens across their life cycle. The Act isolates the investment contract status by introducing Ancillary Assets, tokens whose value relies on the entrepreneurial or managerial efforts of a central group, but only during their initial, centralized phase. The bill creates a path for tokens to leave that category once a network develops beyond heavy reliance on a core team. It's basically a get-out-of-jail-free card for tokens that grow up and stop needing a central team to hold their hand.

To provide a legal exit ramp, the Act establishes a Maturity test, allowing tokens to graduate to Digital Commodities once the network becomes sufficiently decentralized. Originators would be able to certify that managerial efforts have become nominal, opening a 60-day window for the SEC to challenge that claim or allow the asset to proceed with a presumption of non-security status in secondary trading. Think of it as crypto's version of a college graduation—you're still on your parents' insurance until you pass the test.

If that framework survives negotiations, it could bring the U.S. closer to a usable definition for utility tokens. Until then, stablecoins may have moved into a clearer legal era, while much of the rest of crypto still waits for