PayPal Intends to Provide a 3.7% Reward for Holding the Stablecoin, PYUSD - According to Released Information
The U.S. Congress has taken a significant step forward in regulating stablecoins with the passing of the GENIUS Act, signed into law by President Trump on July 18, 2025 [1][2][3][4][5]. This legislation establishes the first federal regulatory framework for payment stablecoins, focusing on reserve requirements, licensing, and financial stability. However, it does not authorize or regulate paying interest on stablecoins [1].
The previously proposed STABLE Act in the House was superseded by the GENIUS Act, though some believed provisions of the STABLE Act should have been included [1]. Notably, neither the STABLE Act nor the enacted GENIUS Act explicitly authorize or regulate paying interest on stablecoins.
In the current regulatory landscape under the GENIUS Act, stablecoin issuers are not permitted to pay interest on the tokens [1]. For instance, holders of the USDC stablecoin on Coinbase can currently earn a 4.1% return in the United States [6], while PayPal plans to offer a 3.7% return for holding its PYUSD stablecoin in PayPal or Venmo wallets [7]. The rationale behind this ban is to safeguard bank deposits, as paying more to deposit holders could make loans more expensive [8].
It's important to note that the GENIUS Act's regulatory framework is focused on consumer protection, financial stability, anti-money laundering, and defining issuance/licensing standards [1][2][3][4][5]. However, it does not address stablecoin interest payments. In some jurisdictions, stablecoins are considered e-money and are not allowed to earn interest [9].
As stablecoin legislation moves forward, regulatory clarity may be on the horizon. The ban on interest or yield by the issuer for stablecoins is aimed at safeguarding bank deposits, but it remains to be seen how this ban will apply more broadly, potentially not just to the issuer, but also to any party that receives payment from the issuer in connection with the stablecoin [10].
References:
- CoinDesk: The US GENIUS Act: What it means for stablecoins
- Cointelegraph: US Senate passes bipartisan stablecoin bill, GENIUS Act
- Bloomberg: The U.S. Senate Approves Stablecoin Bill, Setting Up House Showdown
- Federal Reserve: The Federal Reserve's Role in the Supervision of Stablecoins
- CoinDesk: US Stablecoin Bill Passes House Committee, Heads to Senate for Vote
- Coinbase: Earn up to 4.1% APY on USDC
- PayPal: Introducing PayPal's New Stablecoin, PYUSD
- The Block: PayPal's stablecoin PYUSD will not pay interest to users
- Financial Conduct Authority: Cryptoassets: Regulatory Approach
- CoinDesk: US Stablecoin Bill Proposes Ban on Interest Payments
- The passing of the GENIUS Act has established the first federal regulatory framework for payment stablecoins, but it does not authorize or regulate paying interest on these assets.
- Unlike the previously proposed STABLE Act, the GENIUS Act does not explicitly authorize or regulate paying interest on stablecoins.
- In the current regulatory landscape under the GENIUS Act, stablecoin issuers are not permitted to pay interest on the tokens, such as USDC on Coinbase, which currently offers a 4.1% return.
- As stablecoin legislation moves forward, regulatory clarity may be on the horizon, with the ban on interest or yield by the issuer aimed at safeguarding bank deposits, but its application beyond the issuer remains to be seen.
