Why Does MiCA And The GENIUS Act Ban Stablecoin Interest

The European Union’s MiCA regulation and the United States’ GENIUS Act both prohibit stablecoin issuers from paying interest or yield for merely holding a token, to prevent payment stablecoins from functioning as unregulated, deposit-taking accounts. The stated policy goal is to contain systemic risk, particularly commercial bank deposit flight during periods of financial stress. The two regimes are not equivalent, and the difference matters commercially: MiCA has applied since 2024 and extends the prohibition to crypto-asset service providers and to benefits paid by third parties, while the GENIUS Act binds only permitted and foreign payment stablecoin issuers and does not take effect until January 18, 2027. The direction of travel is nonetheless clear. As direct, issuer-backed yield is removed, competitive advantage in stablecoin ecosystems is expected to shift away from financial incentives and toward transaction efficiency, settlement infrastructure, and