Tag Archives: stablecoin

The Stablecoin in the Headlines Is Not the Stablecoin I Know

The Stablecoin in the Headlines Is Not the Stablecoin I Know

When you scroll through the financial news these days, you meet one stablecoin. The articles describe a digital dollar, a boring token that hugs the greenback, and a shiny new tool for Wall Street. Then you open a DeFi app and meet something else entirely, a lively instrument that moves at 3 a.m. on a Sunday and settles in seconds.

My complaint with the coverage is simple. The media keeps flattening three different animals into one word, and that word hides the parts I care about most. So let me separate the animals, because a public-chain stablecoin, a private-chain stablecoin, and a tokenized deposit do not share much beyond a family resemblance.

The Public-Chain Stablecoin

Start with the creature crypto natives know first. A typical stablecoin in our world is a fiat-collateralized token, and the idea is refreshingly simple. For every digital token an issuer mints on a blockchain, one real dollar sits in a bank account or in a short-term U.S. Treasury bill.

USDT and USDC dominate this market, and together with the rest of the field, they push the total stablecoin market cap past $300 billion in 2026. Traders use these tokens as the base pair for everything, parking value between bets without touching a bank. I use them for what I love most, which is DeFi.

They fuel lending markets on Aave, for instance, and they let anyone with a phone and a wallet earn, borrow, and settle without asking a branch manager for permission.

That permissionless quality is the whole point, and it is also the part the headlines skip. A public-chain stablecoin lives on Ethereum, Solana, or TRON and follows smart-contract code that anyone can read. You hold it in your own wallet with your own keys. You send a million dollars to a friend on another continent at 2 a.m. on a Sunday, and no bank approves the trip.

Every transaction is printed on a public ledger that anyone can audit with a block explorer. That transparency cuts both ways, and it is why regulators actually love these ledgers as tools for tracking illicit finance, but it also means the system answers to mathematics before it answers to a committee.

The Private-Chain Version

Now meet the second animal, the one Wall Street prefers. Banks can also mint dollar tokens, but they do it on private blockchains where only approved clients participate. JPMorgan runs JPM Coin on its own internal ledger, and the bank now moves billions of dollars a day for corporate clients through that system.

The industry calls this a wholesale stablecoin or a tokenized deposit, and the GENIUS Act, which President Trump signed in July 2025, explicitly lets licensed banks build on private chains with built-in controls. The differences from the public version are not cosmetic.

A corporation does not want rivals watching its treasury flows, a bank wants the power to freeze or reverse a mistaken transfer, and nobody wants to pay public gas fees that spike without warning. So the private chain trades openness for control, and it serves interbank settlements and large corporate payments rather than you and me.

The Third Animal Is Different

The third animal is not a stablecoin at all, even though journalists keep calling it one. The dollar balance you see in your PayPal or Venmo app is a stored-value liability under state money-transmitter law, and the balance in your Chase app is a commercial bank deposit insured by the FDIC up to $250,000.

The Federal Reserve’s FedNow rail, which launched in 2023, settles bank dollars instantly around the clock without any ledger technology. Federal law draws a bright line here. To earn the name stablecoin, a digital dollar must exist as a token on a distributed ledger, and the law does not care whether that ledger is public or private.

Off-chain database dollars fall under older banking and electronic-money rules, and they come with fractional-reserve lending rather than the strict one-to-one reserve mandate that the GENIUS Act sets for payment stablecoins.

What Washington Sees

Notice what Washington sees in all of this, because the government views stablecoins through a completely different lens than either crypto natives or bankers do. Treasury officials cheer dollar-backed stablecoins as hungry buyers of short-term U.S. debt, and Tether alone holds roughly $140 billion in Treasuries, a stake that ranks it ahead of countries like South Korea and the United Arab Emirates.

Lawmakers wrote the GENIUS Act to turn stablecoin issuers into something like narrow banks that must hold cash and Treasuries one-to-one, publish audited reserve reports, and freeze tokens when law enforcement flags a wallet.

The law also strips stablecoins of any interest payment, and a separate executive order blocks the Federal Reserve from issuing a central bank digital currency. Washington therefore anoints the private, regulated stablecoin as America’s digital dollar, treating the token more like a digital cashier’s check than Bitcoin.

Why Reserve Quality Matters

That legal carve-out explains why the government refuses to call a payment stablecoin a security or a commodity. The SEC and the CFTC police bets on rising prices, and a token that stays at one dollar and pays no yield gives nobody an expectation of profit.

Banking regulators like the OCC and the Federal Reserve take the stablecoin file instead, because a run on a big issuer would spill into real banks and the Treasury market, while a crash in a speculative coin mostly burns its own holders. The 2022 collapse of TerraUSD perfectly illustrates risk.

That algorithmic coin had no real reserves backing it, and when trust evaporated, it fell from $1 to a few cents, wiping out about $45 billion in market value in days. Reserve quality is the entire game, and the law now writes that lesson into statute.

Where I Plant My Flag

Here is where I plant my flag. The private-chain version and the tokenized deposit do real work for corporate treasurers, and I welcome the clarity the GENIUS Act brings. I still root for the public one because openness compounds.

A permissionless dollar token lets a freelancer in Manila collect wages from Berlin in seconds for pennies, lets an unbanked teenager hold digital cash that no one can freeze with a phone call, and lets developers compose money into code the way they compose software.

DeFi turns those tokens into credit markets, savings tools, and insurance pools that run in the open, and every transaction leaves a public trail that any citizen can check. The private rails optimise for institutional comfort, while the public rails optimise for user dignity.

So the next time a headline calls stablecoins “boring digital dollars,” ask which animal the writer actually means. The answer changes everything about the risk you hold, the rights you keep, and the future you get. I know which one I hold, and I know which one I cheer for.

 

Source: https://www.financemagnates.com/cryptocurrency/the-stablecoin-in-the-headlines-is-not-the-stablecoin-i-know/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
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Stablecoin Yield Ban Deal Clears Path for Landmark Crypto Law in April

Stablecoin Yield Ban Deal Clears Path for Landmark Crypto Law in April

The recent bipartisan agreement on stablecoin yields marks a pivotal moment for United States crypto regulation, and it demands careful scrutiny from those who understand both the technical realities of decentralized finance and the political pressures shaping this legislation. Senators Thom Tillis and Angela Alsobrooks have reached an agreement in principle with the White House to restrict yield on passive stablecoin balances, a compromise that resolves a major standoff between traditional banks and crypto innovators. This development removes a critical roadblock to the CLARITY Act, potentially enabling a committee markup in the second half of April, with a target window of April 14 to 20 for Senate Banking action.

The core of this compromise centers on how stablecoin rewards can be paid, specifically targeting yield paid on idle balances. Reports indicate the deal would bar rewards on passive stablecoin balances, addressing banks’ fears that high on-chain yields could drain deposits, while possibly still allowing activity-based rewards on certain products. Senator Alsobrooks framed the agreement as protecting innovation while preventing widespread deposit flight, while Senator Tillis stressed that industry still needs to vet the language before it becomes locked in. This distinction between passive and active yields matters tremendously for how users interact with digital assets. A person who holds stablecoins simply to preserve value faces different constraints than someone actively participating in liquidity provision or governance. The technical challenge lies in defining these categories without creating arbitrary boundaries that stifle legitimate innovation or push activity offshore. Having examined similar regulatory frameworks globally, I recognize that the devil truly resides in these implementation details.

This yield dispute represented one of the primary reasons the Digital Asset Market Clarity Act remained stalled in the Senate Banking Committee, despite versions advancing through other legislative channels. With this compromise in place, Senate Banking leaders now prepare for an April markup and potential mid April vote, giving the CLARITY Act its first real path forward in months. If the bill progresses, it can move to the Senate floor and be reconciled with earlier work, potentially delivering the first broad United States market structure law for crypto on top of the 2025 GENIUS Act stablecoin framework. This timeline creates both opportunity and pressure. Legislative windows can close quickly, and the details finalized in committee often determine a bill’s ultimate impact more than its broad intentions. For those watching institutional adoption trends, this sequence matters because regulatory clarity often precedes significant capital allocation decisions.

The CLARITY Act aims to spell out federal jurisdiction, giving the SEC and CFTC defined roles and establishing rules for trading platforms, custody, tokens and stablecoins. Limiting yield on passive stablecoin balances would likely constrain United States based park and earn stablecoin products, while still giving room for more regulated, bank compatible designs if they tie rewards to activity. This tradeoff reflects a fundamental tension in crypto regulation. Users seeking yield on idle assets represent a significant portion of retail participation, and restricting these options could reduce domestic engagement with digital assets. At the same time, traditional financial institutions require certain guardrails before committing substantial resources to this emerging sector. The challenge involves creating a framework that protects consumers without eliminating the very features that make decentralized finance attractive. Having analyzed market liquidity patterns and derivatives volume as indicators of sentiment, I observe that regulatory uncertainty often suppresses participation more than any specific rule might.

Other open issues, including DeFi treatment and ethics rules on officials holding crypto, could significantly affect how permissive or restrictive the final regime becomes for on chain finance and institutional participation. The definition of passive balances remains particularly crucial because it determines which activities fall under restriction. Does providing liquidity in a decentralized pool count as passive or active? What about staking tokens to secure a network? These questions cannot be answered through political compromise alone. They require technical expertise and a genuine understanding of how blockchain systems function. Having served in government advisory roles related to blockchain technology, I recognize the difficulty of translating technical concepts into legislative language. Getting this translation wrong risks creating rules that either fail to address real risks or inadvertently harm legitimate innovation.

This compromise represents progress but not a finished solution. This is mentioned in my previous article too. The United States stands at a crossroads where it can either lead in shaping a thoughtful regulatory environment for digital assets or cede that leadership to jurisdictions with more flexible approaches. The CLARITY Act’s potential to define federal rules for exchanges, custody and stablecoins offers a foundation for broader institutional comfort with digital assets. The tradeoff of tighter limits on easy stablecoin yield in exchange for regulatory certainty requires careful evaluation. For users who value financial sovereignty, the distinction between passive and active yields may feel arbitrary when the underlying technology treats all transactions with equal transparency. The risk involves creating a system that favors incumbent financial structures over emerging decentralized alternatives, potentially slowing the very innovation that could enhance financial inclusion and resilience.

Watch for the published committee draft, the exact wording on passive balances, and DeFi language, because those details will decide whether this framework becomes mainly a compliance burden or a foundation for larger, safer crypto adoption in the United States. The April markup window provides a critical opportunity for industry stakeholders to engage with lawmakers on these technical nuances. Having followed the evolution of crypto regulation across multiple jurisdictions, I observe that the most effective frameworks emerge from ongoing dialogue between policymakers and technologists. The stablecoin yield compromise removes a significant obstacle, but the journey toward comprehensive crypto market law requires continued attention to how rules affect real world usage patterns. For those building the next generation of financial infrastructure, the stakes extend beyond immediate compliance to the long term viability of decentralized systems within a regulated environment.

The political dynamics surrounding this legislation reflect broader tensions about the future of money and financial power. A bipartisan deal that addresses bank concerns while preserving some room for crypto innovation demonstrates the possibility of constructive compromise. The ultimate test will be whether the resulting framework enables the United States to harness the benefits of blockchain technology while managing its risks. The flow from compromise to committee markup to potential floor vote creates a sequence where each step offers opportunities for refinement or regression.

No matter what happens, I will still believe in the decentralized future, the next evolution of the internet.

 
 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

There Are Many Obstacles Behind the CLARITY Act Delay, but Stablecoin Yield Is Not One

There Are Many Obstacles Behind the CLARITY Act Delay, but Stablecoin Yield Is Not One

By the time another headline declares the CLARITY Act stalled because “crypto bros want yield,” we have already lost the plot. The narrative that stablecoin rewards alone are holding up America’s first comprehensive digital asset market structure framework is not just incomplete.

It is dangerously reductive. I can tell you that the delays stem from five substantive, interconnected challenges that reflect deeper tensions about financial architecture, technological feasibility, and political will. Reducing this to a simple fight over yield misunderstands both the stakes and the sophistication required for meaningful regulation.

The Stablecoin Yield Loophole

The first and perhaps most technical issue concerns the so-called “yield loophole” in the GENIUS Act. It is true that the GENIUS Act, signed into law in 2025, explicitly prohibits permitted payment stablecoin issuers from paying interest or yield solely for holding a stablecoin.

However, as banking stakeholders have correctly identified, this prohibition does not automatically extend to third-party intermediaries. Exchanges, wallet providers, or payment applications may offer “rewards,” “staking yields,” or other return-like incentives on idle stablecoin balances.

This is not regulatory pedantry. It is a legitimate concern about regulatory arbitrage. If non-bank entities can replicate the economic function of an insured deposit account without equivalent capital, liquidity, or consumer protection safeguards, we risk creating a two-tiered financial system where innovation becomes a vector for systemic vulnerability.

The banking sector’s push for unambiguous statutory language in the CLARITY Act is less about stifling competition and more about ensuring functional equivalence in risk management.

With the total stablecoin market capitalization exceeding $307 billion as of February 2026, the scale of potential disintermediation demands careful calibration, not ideological reflex.

Operational Risks of Always-On Stablecoin Rails

Operational and systemic stability concerns extend far beyond yield semantics. The 24/7 nature of crypto markets introduces liquidity and settlement pressures that traditional banking infrastructure simply was not designed to absorb.

Community banks, which form the backbone of American credit allocation, lack the technological capacity to liquidate reserve assets such as U.S. Treasuries in real time to meet instant redemption demands that could cascade during periods of market stress.

Without parity in operational resilience, always-on stablecoin rails could propagate shocks into the traditional payment system. This would undermine the very stability the Act seeks to protect.

This is not hypothetical.

The DeFi Compliance Dilemma

Nowhere is the tension between regulatory intent and technical reality more acute than in the treatment of decentralized finance. The CLARITY Act’s requirement that DeFi protocols register as financial institutions and report transaction data fundamentally conflicts with the architecture of permissionless code.

Industry experts, including many open-source developers I have consulted, argue that enforcing bank-like KYC/AML obligations on non-custodial, autonomous protocols is not only technically infeasible but risks criminalizing the very act of publishing code.

This is not a defense of illicit activity. It is a recognition that privacy-preserving design and decentralized governance are foundational to the value proposition of Web3. If we mandate compliance mechanisms that require central points of control, we do not regulate DeFi. We extinguish it.

The Act’s provision granting the SEC discretion to exempt certain DeFi activities is a step in the right direction, but it remains insufficient without clearer safe harbors for truly decentralized systems.

Ethics Provisions and Political Gridlock

Compounding these technical challenges are ethics provisions that have become political flashpoints. Senate Democrats’ introduction of stringent conflict-of-interest clauses, widely interpreted as targeting high-profile crypto initiatives linked to former President Trump, such as World Liberty Financial, has intensified partisan gridlock.

While preventing public officials from profiting off the policies they shape is unquestionably important, weaponizing ethics rules to score political points complicates bipartisan compromise on the bill’s core regulatory framework.

In an environment where digital asset policy should be guided by evidence and expertise, the infusion of partisan theater risks producing legislation that satisfies short-term political objectives while failing to address long-term structural needs.

The SEC–CFTC Jurisdiction Battle

At the core of these disputes is the SEC–CFTC jurisdictional tension. Banks favor the SEC’s investor-protection mandate, while critics question the CFTC’s capacity to oversee retail platforms. The CLARITY Act splits authority: the CFTC handles anti-fraud and anti-manipulation in digital commodities, and the SEC covers investment contract assets during fundraising.

While clear in theory, this risks fragmented oversight. SEC Chair Paul Atkins calls it a way to “future-proof” rules, highlighting that ambiguity mainly benefits bad actors.

A Framework for Digital Asset Markets

The Act’s three-category framework—digital commodities, investment contract assets, and permitted payment stablecoins—aims to bring order to a chaotic market. Investment contract assets are treated as securities only during fundraising, converting to digital commodities in secondary markets.

The “maturity” certification, requiring functional blockchain operations, open-source code, transparency, and decentralized control, provides a clear pathway out of securities regulation, forming the foundation for a sustainable innovation ecosystem.

Moving Beyond Simplistic Narratives

The CLARITY Act aims to balance innovation with protection, but its success depends on rules that are technologically literate, economically sound, and ethically grounded. With the stablecoin market now larger than the GDP of many nations, today’s decisions will shape tomorrow’s financial infrastructure and must be guided by evidence, not echo chambers.

 

Source: https://www.financemagnates.com/cryptocurrency/many-obstacles-are-behind-the-clarity-act-delay-but-stablecoin-yield-is-not-one/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j