Stablecoins May Generate Yield Through DeFi, But Holders Assume Risk

Twenty-one financial institutions have announced plans to introduce a U.S. dollar stablecoin in the first half of 2027, which could potentially generate yield through independent DeFi protocols.

The GENIUS Act prohibits permitted payment stablecoin issuers from paying interest or yield to holders, but Katana CEO Matt Fisher explained that this restriction does not apply to how holders use tokens after receiving them.

Fisher stated that once a compliant stablecoin leaves the issuer and moves into an independent protocol, yield can come from overcollateralized loans, market makers financing inventory, or other users paying to borrow the asset.

He emphasized that holders of bank-issued stablecoins bear the risk if the arrangement fails, as infrastructure such as Katana's VaultBridge protocol is designed to route stablecoins toward lending demand, not provide a guarantee.