Stablecoin rules have started to cover reserves and redemption. The harder policy question is what happens when a payment token begins to offer its holder a return, and which regulator that return belongs to.
Bernardo Brites is co-founder and CEO of Trace Finance, a regulated banking correspondent that connects stablecoin settlement to local banking systems in Brazil, the United States and emerging markets. In this opinion piece he argues that yield products need to be separated clearly from the payment tokens they are built around. Trace Finance operates on regulated, bank-connected payment infrastructure and may benefit from the policy direction discussed. The views are his own.
Stablecoins have moved beyond a debate about issuance. Policymakers face a harder task. They must separate the payment token from the financial product built around it. A token that redeems at par and holds liquid reserves presents one set of risks. A product that pays a holder for keeping that token presents another.
That separation will shape the next phase of stablecoin regulation. A yield feature can be deposit-taking, lending, a securities offering, or a reward programme, depending on how it works. The label on the token tells a little about the regulator. The legal and economic design of the return matters more.
The payment token has a clearer rulebook
The US GENIUS Act gave stablecoin issuers a clear starting point. The law requires permitted issuers to maintain identifiable reserves at least equal to outstanding payment stablecoins. It also bars an issuer from paying interest or yield merely because a person holds its token. Those rules address two direct questions. Can the holder redeem, and what assets support that redemption?
The next question is less settled. The Act does not expressly settle every arrangement in which an affiliate, platform, lender, or other third party pays a return connected to a stablecoin. The White House has described this as a gap that can let firms offer interest-bearing arrangements outside the issuer itself. That distinction will attract close attention because the economic result for a customer can resemble issuer-paid yield even when the legal structure differs.
Yield is a product category, not a single feature
The term ‘stablecoin yield’ hides important differences. A customer can lend tokens to a platform that lends them onward. A platform can place reserves or customer assets in short-term instruments and share some return. A firm can pay a reward from its own balance sheet to encourage payment activity. A customer can also use a token as collateral and receive a return through a separate investment product.
These models create distinct claims on assets, loss paths, and duties to the customer. Regulators should ask who promises the return, where the funds sit, who controls the assets, and who carries losses when a borrower fails or a market moves. They should also ask if a customer can redeem the payment token at par while the yield product remains open or suffers a loss.
The US Securities and Exchange Commission’s Division of Corporation Finance said in April 2025 that its statement on certain reserve-backed payment stablecoins did not express a view on yield-bearing stablecoins. It said the legal analysis depends on the facts of a particular stablecoin and the circumstances of its offer and sale. This position is not a final rule, but it makes the boundary plain. The payment-token analysis does not settle the legal treatment of the return built around it.
Banking links make the boundaries testable
The strongest products will make their boundaries visible. A payment stablecoin should have clear reserve, redemption, and disclosure terms. A yield product should state its funding source, its counterparty, its loss rules, and the legal claim a customer receives. The two products may work together, but they should not depend on customer confusion about where payment funds end and investment risk begins.
Bank-connected infrastructure can support this separation because authorised financial institutions already operate with account records, customer checks, payment controls, and defined responsibility for funds. The value is not a bank logo on a token. The value is an operating structure that can show which party holds the funds, which party owes the customer, and which rules apply when a transaction fails.
Brazil offers a useful operational example. Banco Central do Brasil‘s Resolution BCB 520 places virtual asset service providers within a defined regulatory perimeter and sets rules for their activity. It does not provide a final answer to the classification of every yield product. It shows why regulated local settlement and clear responsibility matter when stablecoins move between token networks and national payment systems.
The test comes during stress
Some people will argue that strict limits on stablecoin yield will push customers to offshore platforms or unregulated protocols. That risk is real. A rule that blocks every return product could reduce choice and move activity into structures that give users less information.
The answer is not to treat every payment token and every yield product as the same thing. Regulators can permit products that explain their funding, reserve treatment, redemption rights, fees, and loss allocation. They can set different rules for a payment balance, a lending account, and an investment product. That approach gives firms room to compete on product design while giving customers a way to judge the risk they accept.
Stablecoin issuance is becoming a question of reserves, licensing, and redemption. Stablecoin yield is becoming a question of control, funding, loss, and disclosure. The firms that can answer those questions in plain terms will have a stronger basis for operating as enforcement and rulemaking develop.
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