According to Woofun AI, the US Treasury Department and the Office of Monetary Control (OCC) have officially finalized the final regulatory framework for payment of stablecoins under the GENIUS Act, which will take full effect in January 2027.
This regulatory action is officially defined as a key step to establish America's global dominance in the digital asset field, but its core logic far exceeds the scope of industry protection; it is essentially a national-level resource dispatch that transforms cryptographic liquidity into a loyal successor to US Treasury bonds through compliance shackles. Under the cover of a risk-prevention narrative, the stablecoin yield channel for ordinary coin holders was legally cut off, and the cost of compliance was ultimately borne by retail investors in the secondary market, marking the official beginning of an era of interest restructuring under US regulation and collusion with Wall Street institutions.
To clarify the essence of this regulatory game, it is necessary to go back to the implementation timeline and hard restrictions of the law. The “GENIUS Act”, signed by President Trump in July 2025, is the first federal-level regulatory framework for stablecoin payments in the US. The final implementation rules were recently released by the OCC, and it is clear that it will officially take effect on January 18, 2027. Compared to the vague area of the previous proposal, the rules implemented this time present three insurmountable red lines: first, requiring 1:1 high-quality asset reserves, and the back of stablecoins must correspond to eligible assets such as cash and US bonds; second, implementing an absolute “interest ban” that explicitly prohibits users from paying interest only because they hold stablecoins; and finally, establish a crowding and fusing mechanism. If the redemption amount in a single day exceeds 10% of the total circulation amount, it must be immediately reported and the regulatory authorities decide whether to defer processing.
These three rules seem to be aimed at maintaining system stability, but from capital flows to deep digging, the macro intention behind them is to turn crypto liquidity into a stable receiver of US Treasury bonds. Currently, the total market value of global stablecoins is close to 200 billion US dollars. As compliance frameworks are implemented and traditional financial institutions accelerate their entry into the market, the size of this reservoir will expand exponentially. The US government has used this to establish a large-scale and fully controlled “legal purchase mechanism for US bonds” in the crypto world, essentially turning the liquidity of the crypto market into the most loyal buyer of US Treasury bonds.
According to data compiled by Woofun AI, this mandatory reserve mechanism allows stablecoin issuers to allocate large amounts of capital to low-risk US Treasury bonds, thereby establishing the ability of US bonds to absorb crypto liquidity at the federal level, while the “interest ban” ensures that this portion of the proceeds does not flow back to retail investors, forming a one-way capital flow channel from the crypto market to the US Treasury Department.
The restructuring of the distribution of benefits directly led to the end of issuers' monopoly on profits and retail earnings. Currently, short-term US bond yields are impressive. Issuers such as Circle (CRCL.US) use user funds to buy US bonds and earn billions of dollars in risk-free interest every year.
However, the OCC's final rule explicitly prohibits returning this portion of the proceeds to users in the form of 'interest on holding', which means that in the compliant US market, stablecoin issuers monopolize all the benefits of underlying assets, while retail investors bear the cost of fiat currency inflation.
This change announced the end of some centralized exchange (CEX) 'stablecoin high-interest wealth management' dividends. For regular military forces seeking US licenses, such as Coinbase (COIN.US) and its USDC system, high-interest financial management channels will be completely blocked. The OCC clearly stated that although the reward arrangements of third parties or exchanges do not presuppose violations, regulations will gradually examine whether they constitute evasion. This strict compliance pressure forces compliance platforms to actively cut off the channels for retail investors to eat and rest.
It is worth noting that the GENIUS Act restricts “issuer's dividends based on US bond reserves,” but it cannot stop pure market borrowing demand. In the decentralized finance (DeFi) sector, agreements such as Aave and Compound have an annualized yield (APY) of stablecoins derived from interest paid by real on-chain borrowers (such as leveraged traders), or transaction fees based on automated market maker (AMM) mechanisms.
This organic income, which is driven by “real supply and demand in the market,” is difficult to be classified as a “disguised dividend from the issuer” in the legal definition. Therefore, when some CEXs can no longer provide attractive stablecoin financial management, retail investors and institutions can only deposit their USDC and other compliant stablecoins into DeFi agreements in order to fight inflation and obtain stable returns. While harvesting retail investors, the GENIUS Act's “interest ban” is likely to unexpectedly become a catalyst for the on-chain DeFi explosion. Under the squeeze of compliance regulations, DeFi lending and liquidity pools will absorb overflow capital, leading to a passive increase in total hedged value (TVL).
The market is facing a polarized game between zero interest compliance and offshore interest. Instead of killing stablecoins, the GENIUS Act redistributed their profits, establishing the dollar system's dominance over the crypto world while also completing a legal harvest of risk-free returns for retail investors. The future stablecoin market will be completely torn apart: on the one hand, there are highly regulated stablecoins in the US, which are safe and favored by Wall Street institutions, but retail investors cannot reap the benefits of holding coins; on the other hand, offshore exchanges and offshore stablecoins such as USDT do not operate at all. As long as they do not touch US licenses, they can theoretically continue to provide current income to retail investors through market making or on-chain agreements. When 'absolute compliance' meant only taking risks without sharing profits, a 10-billion-dollar vote between a 'US license' and 'high interest' has only just begun.
This structural split will force investors to make difficult choices between safety and profitability. As a result, the offshore market may usher in a new round of capital inflows, while the compliance market will become a pure store of value, which is unattractive. This is a typical case where the regulatory arbitrage space was once again institutionally expanded following the split between traditional finance and crypto finance. It indicates that global crypto liquidity will form a new balance between compliance and offshore.