GENIUS Act Bans Yield on Stablecoins in the U.S.
- Stablecoin regulations reshape the DeFi landscape.
- Shift from centralized to DeFi platforms.
- Potential boost for Ethereum-based platforms.
The prohibition impacts stablecoin issuers and could drive capital to DeFi protocols.
The GENIUS Act prohibits US-based entities from offering yield on stablecoins without regulatory authorization. This impacts entities like stablecoin issuers offering yield-based products. The prohibition came into effect on July 19, 2025, following passage by the U.S. House of Representatives.
The law affects US dollar-denominated stablecoins like USDC, USDT, and DAI, pushing investors toward alternative DeFi protocols. Analysts expect increased inflows into Ethereum-based DeFi as yield seekers exit regulated products.
“The removal of yield on stablecoins is great news for Ethereum-based DeFi as the main alternative.” — Nic Puckrin, Crypto Analyst
Historically, restrictions on institutional yield products have led capital to flow into governance and protocol tokens. Ethereum and Layer 2 solutions could see increased activity as investors seek decentralized yield.
The GENIUS Act could lead to profound effects on the DeFi ecosystem. Analysts anticipate capital migrating from centralized models, enhancing liquidity in the DeFi sector. Meanwhile, protocol tokens may gain traction as these shifts unfold.
