Bank Stablecoins May Leave Cash Idle, But Can Earn Yield in DeFi
A group of 21 financial institutions plans to introduce a US dollar stablecoin in the first half of 2027. The new token will be part of a company that is set to be established by the end of 2026, subject to closing conditions.
According to Katana CEO Matt Fisher, the stablecoin can earn yield through independent DeFi protocols, but holders would assume risks not covered by the issuing banks.
Fisher emphasized that the GENIUS Act prohibits permitted payment stablecoin issuers from paying interest or yield to holders. However, he noted that once a compliant stablecoin leaves the issuer and moves into an independent protocol, yield can come from genuine economic activity.
The return on investment would depend on lending or other income-producing activities rather than solely on ownership of the stablecoin. Fisher suggested three tests for identifying sustainable stablecoin yield: identifying who is paying to use the stablecoin, examining how the rate behaves, and removing token rewards to see if the base return disappears.