Stablecoin yield game upgrade: After concessions in the crypto industry, how will traditional banks respond?

February 28, 2026, news from Washington’s legislative corridor has caused the entire crypto industry to hold its breath. A game that could determine the fate of a multi-trillion-dollar market is entering its final critical stage, centered around the core clause in the CLARITY Act regarding whether stablecoins are allowed to generate yields.

Overview: A Zero-Sum Game Over “Yield Rights”

The so-called “stablecoin yield game” essentially revolves around the ownership of the profits generated from the reserves. Currently, compliant stablecoins like USDT and USDC see their issuers investing reserve assets (mainly U.S. short-term government bonds) to earn interest. Aside from retained profits, most of these earnings are paid out as “distribution costs” to exchanges and wallet providers, leaving end users with almost nothing.

The ongoing U.S. Congress review of the CLARITY Act aims to clarify this power structure. Recent negotiations show that the crypto industry has made significant concessions on yield issues, accepting the core principle that “payment stablecoins cannot pay interest.” However, the banking sector remains dissatisfied, actively lobbying to block any loopholes that could allow funds to bypass traditional deposit systems.

Background and Timeline: From Libra’s Failure to Bank “Counterattack”

The tense relationship between stablecoins and banks has not developed overnight. Reviewing this timeline reveals the escalating contradictions:

• 2019: Facebook (now Meta) launched Libra, aiming to create a global digital currency backed by a basket of currencies. This sparked global regulatory panic and is considered the starting point of banking industry’s vigilance against stablecoins.
• March 2023: Silicon Valley Bank collapsed; Circle disclosed that $3.3 billion of its $40 billion USDC reserves were trapped, causing USDC to briefly depeg. This event exposed the tangled risks between stablecoins and traditional banking systems.
• July 2025: The U.S. “GENIUS Act” (Guiding and Establishing U.S. Stablecoin Innovation Act) was signed into law, first clarifying the legal status of payment stablecoins at the federal level, explicitly banning their interest payments and defining them solely as “payment tools,” not “investment products.”
• February 2026: As negotiations on the CLARITY Act advance, the American Bankers Association and other institutions publicly warned Congress that allowing crypto platforms to pay interest could lure trillions of dollars of deposits out of heavily regulated banks into a “parallel banking system,” risking systemic instability.

Data and Structural Analysis: How Real Is the Panic Over $310 Billion in “Deposit Outflows”?

Currently, the total global stablecoin circulation is about $314 billion, with USDT and USDC accounting for 89% of the market share. While this figure is negligible compared to the $1.6 quadrillion global B2B payments market (only 0.01%), its marginal growth rate is astonishing.

Market opinions differ greatly on the scale of fund outflows:

• Optimists (Federal Reserve economist Wang Jiaxu): Assuming conservative demand, only about $65 billion might flow out of banks into stablecoins.
• Cautious analysts (U.S. Treasury): Up to $6.6 trillion in deposits could be at risk of outflow.

Additionally, Circle’s financial reports reveal the harsh structure of stablecoin yield distribution: in Q4 2025, Circle generated $733 million in reserve income, of which about $461 million (roughly 63%) was paid to “distribution partners” (exchanges and wallets that control user access). This means that if interest rates decline or regulations tighten in the future, the first to bear the brunt will be issuers without control over distribution channels.

Public Opinion Breakdown: Who Are the “Guardians” and Who Are the “Disruptors”?

Regarding stablecoin yields, the market clearly divides into three main camps:

Industry Impact Analysis: Three Forms of Bank “Response”

Regardless of legislative outcomes, traditional banks are already responding in their own ways:

Infrastructure Self-Iteration

Barclays has begun consulting with tech providers to build a distributed ledger-based payment and deposit platform. JPMorgan’s Kinexys platform (including JPM Coin) processes over $2 billion daily, with total settlements surpassing $2 trillion. This indicates that banks are not simply rejecting blockchain technology but are trying to embed it within a compliant framework, creating “tokenized deposits” as a stablecoin alternative that meets regulatory expectations.

Building Compliance Barriers

The core of bank lobbying is not to eliminate stablecoins but to ensure they cannot enjoy “privileges” like paying interest without bearing “obligations” such as capital requirements and deposit insurance. If the final bill successfully blocks yield channels, stablecoins will revert to a “payment track,” leaving value storage and interest-earning functions to bank-controlled tokenized deposits.

Reconstructing the Co-opetition

Société Générale has issued its own euro stablecoin, and ten European banks have jointly launched a euro stablecoin project. Banks are shifting from “defenders” to “participants.” Future markets may stratify into: compliant, low-yield “payment stablecoins” dominated by banks or heavily regulated issuers; and high-risk, high-yield “interest-bearing crypto assets” remaining in DeFi, subject to entirely different regulatory regimes.

Scenario Evolution Forecasts

Based on current game dynamics, three potential paths over the next 12 to 24 months are:

Scenario 1: Regulatory-Driven “The Great Divide” (60%)

The CLARITY Act ultimately bans interest-bearing stablecoins and imposes reserve and compliance requirements similar to banks. Banks, leveraging their compliance advantages, launch tokenized deposit products, forming new settlement networks with corporate clients. Stablecoin issuers become mere “payment pipelines,” with profit margins squeezed, leading to industry consolidation. End users still cannot earn yields; funds remain within the banking system.

Scenario 2: Technological Breakthrough “The Circumvent” (30%)

Although direct interest payments on stablecoins are prohibited, indirect yield via DeFi protocols (e.g., lending markets or liquidity pools) remains possible. Rapid technological innovation outpaces regulation, enabling users to wrap assets or use cross-chain bridges to deposit stablecoins into yield-generating protocols, creating a split between “compliant front-end” and “yield backend.” The cat-and-mouse game between regulation and innovation continues.

Scenario 3: Paradigm Shift “Bank Surrenders” (10%)

As major banks like Barclays and JPMorgan fully adopt blockchain and realize the efficiency and cost advantages of tokenized deposits, they begin lobbying to amend the “interest ban,” allowing regulated stablecoins or tokenized deposits to pay interest to users. At this point, the boundary between banks and stablecoins blurs, and traditional finance “accepts” stablecoin technology, completing a form of “reconciliation.”

Conclusion

The core of the stablecoin yield game is the redistribution of “seigniorage” rights in the process of digital currency evolution. The crypto industry’s concessions at the legislative level do not end the war but transform the battlefield. The next “response” from traditional banks is not merely resistance but an acknowledgment of the inevitable technological revolution—using regulatory advantages and infrastructure accumulation to regain dominance over payments and deposits.

For market participants, regardless of whether the final outcome is “The Great Divide” or “Paradigm Shift,” a clear signal has emerged: stablecoins are no longer just an internal crypto game but have become a central battlefield for upgrading global financial infrastructure. The true winners may be those who can navigate the delicate balance between regulation, technology, and commercial interests.