Stablecoins: USA vs Europe — The Yield Battle Reshaping Finance

Should stablecoins be allowed to pay yield to their holders? This seemingly technical question has become the single biggest roadblock to crypto regulation in the United States. On February 2, 2026, the White House brought together bankers and crypto industry leaders to try to break the deadlock surrounding the CLARITY Act, the bill designed to regulate digital assets across the Atlantic. Meanwhile, Europe is moving methodically forward with MiCA, its already operational regulatory framework. This gap between the two sides of the Atlantic is redrawing the contours of global finance and could determine where the next generation of financial innovation takes root.

The White House Steps in to Save the CLARITY Act

On February 2, representatives from the largest American banks and leading crypto exchanges gathered at the Eisenhower Executive Office Building, at the invitation of the White House crypto council. The meeting, chaired by Patrick Witt, President Trump’s crypto adviser, had a clear objective: reach a compromise on the stablecoin yield question before the end of February. The CLARITY Act (Clarity for Payment Stablecoins Act) aims to create the first comprehensive federal framework for stablecoins in the United States. It notably requires 100% reserve backing in U.S. Treasury bills and establishes a two-tier oversight system — federal for large issuers, state-level for smaller ones. But it’s the yield question that’s crystallizing all the tension.

Banks vs Exchanges: The Yield Dilemma

The battle lines are clearly drawn. On one side, the traditional banking sector is firmly opposed to allowing stablecoins to pay “rewards” to their holders. Their main argument: these returns resemble deposit interest and could trigger a massive capital flight toward stablecoins, at the expense of community banks and the credit system. On the other side, the crypto industry argues that yield is the product users expect in a high-rate environment. Banning this feature, they contend, would effectively offshoring innovation and protecting incumbents at the expense of competition. Tensions escalated when Coinbase, one of the leading U.S. exchanges, withdrew its support for the bill due to proposed restrictions on stablecoin rewards. This withdrawal contributed to the indefinite postponement of the Senate Banking Committee’s markup.

Could the CLARITY Act Be Pushed Back Beyond 2026?

Citi analysts have recently raised a scenario many had feared: the CLARITY Act might not pass before 2027. Several factors explain this pessimism. First, the November 2026 midterm elections significantly narrow the legislative window. According to Brian Gardner, a political strategist at Stifel, the tight schedule makes passage this year increasingly unlikely. Second, disagreements extend far beyond yield alone. The allocation of responsibilities between the SEC and the CFTC, the legal status of decentralized finance (DeFi), stock tokenization, and even ethical rules for elected officials holding cryptocurrencies remain points of contention. Third, the required bipartisan support is lacking. Senate Republicans are pushing to move forward, but they haven’t yet secured enough Democratic support to pass the legislation.

MiCA: Europe Has Made Its Decision

While Washington debates, Brussels has already delivered its answer. The MiCA regulation (Markets in Crypto-Assets), fully operational since 2025, provides a clear and unambiguous framework on the yield question.

Europe’s Ban on Stablecoin Yield

MiCA classifies stablecoins into two main categories: asset-referenced tokens and e-money tokens. For both categories, the rule is crystal clear: paying interest linked to token holding is prohibited. Europe considers stablecoins to be payment instruments, not savings products. If an entity wishes to offer yield, it must do so through regulated investment vehicles — funds, securities, or other financial products — where transparency obligations and consumer protections are clearly defined. MiCA also includes an escalation mechanism: when a stablecoin becomes “significant” in terms of market capitalization, oversight automatically tightens. This graduated approach aims to prevent systemic risks without stifling innovation in its early stages.

USA vs Europe: The Rules of the Game

On reserves, the CLARITY Act mandates 100% backing in Treasury bills (90-day maturity), while MiCA requires high-quality liquid assets with a minimum of 30% held in bank deposits — rising to 60% for “significant” tokens. On minimum capital, MiCA sets a floor of €350,000 or a percentage of reserves (whichever is higher), whereas the CLARITY Act leaves it to regulators to define requirements on a case-by-case basis. The two frameworks converge on one crucial point: banning yield on payment stablecoins. But where Europe has set this rule in stone, the United States is still debating.

The Rest of the World Isn’t Waiting

The American debate is unfolding against a backdrop of global regulatory competition. Several jurisdictions have already staked their positions. Hong Kong had established a licensing model supervised by the Monetary Authority (HKMA), but Chinese authorities — the PBOC and the Cyberspace Administration of China — recently asked companies to suspend their stablecoin projects. The first licenses, expected by March 2026, remain in limbo. The United Arab Emirates adopted a framework (Payment Token Services Regulation) that explicitly prohibits interest linked to the duration of holding a payment token, while also restricting algorithmic stablecoins. The United Kingdom is taking a cautious “wait-and-see” approach. Yield isn’t explicitly banned, but as soon as a stablecoin begins to resemble a deposit product or a collective investment scheme, additional licensing requirements kick in.

The Hidden Stakes: U.S. Treasury Bills

An often-overlooked aspect of this debate involves the macroeconomic impact of stablecoins. The 100% reserve requirement in Treasury bills makes stablecoin issuers among the largest buyers of short-term U.S. government debt. By early 2026, demand from regulated issuers is already exerting measurable downward pressure on T-bill yields, effectively reducing the U.S. government’s borrowing costs. But this interdependence creates a new systemic risk: a mass redemption event on a major stablecoin could trigger temporary volatility in the market that the entire world considers the “risk-free” benchmark. This symbiotic relationship between stablecoins and sovereign debt is a powerful argument for proponents of swift regulation: the longer adoption grows without a clear framework, the more systemic risk accumulates.

What’s Next for Stablecoin Regulation?

The White House is maintaining pressure for a compromise by the end of February. Patrick Witt described the February 2 meeting as “constructive, fact-based, and above all, solution-oriented.” But the obstacles remain formidable. The outcome of these negotiations will determine not only the future of stablecoins in the United States but also the dollar’s ability to maintain its dominance in an increasingly tokenized financial world. If Washington takes too long, innovation may simply migrate to more welcoming jurisdictions — a scenario neither banks nor the crypto industry want. For investors and market participants, the message is clear: the race to regulate stablecoins is now a global race. And in this competition, regulatory leadership has become a competitive advantage as valuable as the technology itself.