How Regulators Built the 0% Interest Framework

The regulatory architecture protecting $7B in annual rent extraction wasn't an accident—it was constructed piece by piece from 2021-2025

2021
1
OCC Interpretive Guidance
Office of the Comptroller of the Currency issues interpretive letters allowing national banks to custody stablecoins and use public blockchains for payment activities. Establishes legitimacy but maintains banking oversight.
Impact: Brings stablecoins under regulatory umbrella while preserving bank intermediation.
2022
2
STABLE Act Introduced
"Stablecoin Transparency and Accountability for a Better Ledger Economy Act" proposed in Congress. Defines payment stablecoins as instruments that don't pay interest or yield. Bill doesn't pass but establishes regulatory thinking.
Impact: First explicit articulation that stablecoins shouldn't compete with bank deposits on yield.
2022-23
3
SEC Staff Statements
Securities and Exchange Commission staff clarifies that interest-bearing stablecoins would likely qualify as securities under the Howey Test (investment of money with expectation of profit from others' efforts), triggering securities law requirements.
Impact: Creates regulatory deterrent—paying interest means SEC oversight, prospectus requirements, and compliance costs that kill the business model.
March
2025
4
GENIUS Act Passes Senate
"Guiding and Establishing National Innovation for U.S. Stablecoins Act" (S.919, 119th Congress) passes Senate. Explicitly defines payment stablecoins as instruments that "do not offer a payment of yield or interest." Codifies the prohibition into law.
Impact: Zero-interest model becomes legal requirement, not just regulatory preference. Protects bank deposits from stablecoin competition.
April
2025
5
SEC Confirms Non-Securities Status
SEC Division of Corporate Finance issues guidance confirming that stablecoins meeting GENIUS Act requirements (including no interest payments) are not securities. Provides regulatory clarity for issuers following the framework.
Impact: Creates safe harbor—follow the rules (including 0% interest), avoid securities classification. Framework complete.
The Result: Regulatory Protection for Rent Extraction
This wasn't regulatory failure—it was regulatory design. Each piece served a purpose: legitimize stablecoins to extend dollar influence globally, prevent bank disintermediation by prohibiting interest competition, avoid securities classification to keep issuance simple, and maintain government oversight through banking regulation. The framework protects $7B in annual profits for issuers while ensuring stablecoins serve US strategic interests (Treasury demand, dollar dominance) without threatening the banking system. Brian Armstrong (Coinbase CEO) lobbied Congress in April 2025 to allow interest payments, but faces opposition from bank regulators and the Bank Policy Institute who understand the system works exactly as intended.
Sources: OCC Interpretive Letters (2021), STABLE Act legislative text (2022), SEC staff statements (2022-2023), GENIUS Act (S.919, 119th Congress, March 2025), SEC Division of Corporate Finance guidance (April 2025), Brian Armstrong Congressional testimony (April 2025), Bank Policy Institute research on stablecoin systemic risks.
CHAOS & ORDER | M NADAL & CO