According to ChainCatcher and reported by Financefeeds, despite the U.S. (GENIUS Act) prohibiting stablecoin issuers from providing passive income through staking or deposit balances to users, Coinbase and PayPal still offer users USDC (4.1% APY) and PYUSD (3.7% APY) returns through 'reward programs.'
Coinbase CEO Brian Armstrong explained during the earnings call that the company is not the issuer of USDC (issued by Circle) and that what is provided is a 'reward' rather than 'interest,' thus not violating the new regulations. PayPal also maintains its PYUSD stablecoin's 3.7% yield program through a third-party issuer, Paxos.
The two platforms categorize the returns as platform benefits rather than issuer actions, raising regulatory concerns. Supporters claim this is merely a funding optimization, but critics warn it may undermine the effectiveness of the ban, potentially facing stricter regulatory scrutiny in the future.
