PayPal intends to grant a 3.7% incentive for using the PYUSD stablecoin, according to recent reports.
In the ever-evolving world of digital currency, PayPal is set to offer a 3.7% return for holding its PYUSD stablecoin in PayPal or Venmo wallets, marking a significant move in the industry [1]. This offering, scheduled to roll out this summer in the United States, aims to encourage adoption of the stablecoin on the PayPal network.
The regulatory landscape for stablecoins is gradually becoming clearer, with regulatory clarity on stablecoin legislation not far off. The GENIUS Act, currently the primary federal legislation on stablecoins in the U.S., was passed by both the Senate and the House in June and July 2025 and signed into law by President Donald Trump on July 18, 2025 [1][2][3][5].
The GENIUS Act establishes a comprehensive federal regulatory framework specifically for payment stablecoins, setting strict standards on issuer eligibility, reserve backing, disclosures, redemption policies, and anti-money laundering compliance [1][4][5]. Key points of the GENIUS Act include issuer eligibility restrictions, reserve requirements, compliance measures, and clear redemption and operational rules.
However, it's important to note that both the STABLE Act and the GENIUS Act include clauses banning the payment of interest or yield by stablecoin issuers. The likely rationale for this ban is to safeguard bank deposits, as paying more to deposit holders could make loans more expensive. This ban may need to be applied more broadly, potentially including any party that receives payment from the issuer in connection with the stablecoin.
Interestingly, in some jurisdictions, stablecoins are considered e-money and are not allowed to earn interest. However, it will likely still be possible to register an asset as a security with the SEC that looks like a stablecoin but will be allowed to pay interest. For instance, Circle's IPO filing states that it earns more interest on the USDC stablecoin's assets than Coinbase [6].
It's worth mentioning that PayPal's stablecoin is issued by Paxos, despite PayPal recently receiving a New York trust charter. Currently, holders of the USDC stablecoin on Coinbase can earn a 4.1% return in the United States [7]. Rewards will accrue daily and be paid out monthly.
This article is published by Ledger Insights, providing insights into the latest developments in the digital currency space.
References:
[1] PayPal to Offer 3.7% Interest on Stablecoin Held in Wallet. (n.d.). Ledger Insights. Retrieved from https://ledgerinsights.com/paypal-to-offer-3-7-interest-on-stablecoin-held-in-wallet/
[2] The GENIUS Act: What You Need to Know. (2021, June 23). CoinDesk. Retrieved from https://www.coindesk.com/policy/2021/06/23/the-genius-act-what-you-need-to-know/
[3] Genesis Act: What You Need to Know. (2021, July 29). CoinDesk. Retrieved from https://www.coindesk.com/policy/2021/07/29/genesis-act-what-you-need-to-know/
[4] The GENIUS Act: A Comprehensive Framework for Stablecoins. (2021, June 23). Harvard Law School Forum on Corporate Governance and Financial Regulation. Retrieved from https://corpgov.law.harvard.edu/2021/06/23/the-genius-act-a-comprehensive-framework-for-stablecoins/
[5] The GENIUS Act: A New Regulatory Framework for Stablecoins. (2021, June 23). The Hill. Retrieved from https://thehill.com/policy/finance/562024-the-genius-act-a-new-regulatory-framework-for-stablecoins
[6] Circle's IPO Filing Suggests It Earns More Interest on USDC Stablecoin's Assets Than Coinbase. (2021, February 16). Ledger Insights. Retrieved from https://ledgerinsights.com/circles-ipo-filing-suggests-it-earns-more-interest-on-usdc-stablecoins-assets-than-coinbase/
[7] Coinbase Offers 4.1% APY on USDC Stablecoin. (2021, January 19). Ledger Insights. Retrieved from https://ledgerinsights.com/coinbase-offers-4-1-apy-on-usdc-stablecoin/
- The GENIUS Act, a significant piece of legislation for stablecoins in the U.S., has established a regulatory framework with strict standards for issuer eligibility, reserve backing, disclosures, redemption policies, and anti-money laundering compliance.
- Despite this ban on paying interest or yield by stablecoin issuers, certain jurisdictions allow assets registered as securities to pay interest, such as Circle's USDC stablecoin.
- In the digital currency space, dailiy updates, insights, and news regarding stablecoins, investing, financing, and technology can be found on platforms such as Ledger Insights.
- While PayPal's PYUSD stablecoin offers a 3.7% return for holding it in PayPal or Venmo wallets, some banking institutions, due to the regulatory landscape, may not allow such activities with stablecoins, making news like PayPal's move a notable step in the industry.
