Bank stablecoins can earn DeFi yield, but holders bear the risk: Katana CEO

Katana CEO Matt Fisher has said a dollar stablecoin planned by 21 financial institutions for the first half of 2027 could generate yield through independent DeFi protocols, although holders would assume risks not covered by its issuing banks. Summary Twenty-one financial institutions plan to introduce a U.S. dollar stablecoin in the first half of 2027. The GENIUS Act prohibits permitted payment stablecoin issuers from paying interest or yield to holders. Fisher said independent protocols could earn returns by lending stablecoins to identifiable borrowers. Smart-contract, liquidity, oracle, and custody failures would generally leave depositors carrying any losses. Katana CEO Matt Fisher told crypto.news that the GENIUS Act restriction applies to permitted stablecoin issuers, not necessarily to how holders use tokens after receiving them, though he described his position as a market-structure view rather than legal advice. “The GENIUS Act stops the issuer from paying yield; it doesn’t stop the holder from putting the dollar to work somewhere the issuer doesn’t control. Once a compliant stablecoin leaves the issuer and moves into an independent protocol, yield can come from genuine economic activity.” Bank stablecoins may leave tokenized cash idle Fisher’s comments follow a Sep. 1 commitment by Bank of America, Citi, Goldman Sachs, UBS and 17 other financial institutions to establish a new stablecoin company during the second half of 2026, subject to closing conditions. As detailed in a recent 21-firm stablecoin plan, the unnamed venture expects to introduce a dollar-denominated token in the first half of 2027. It may later add tokens tied to other G7 currencies, with a euro product listed as its first expansion priority. The participating institutions said the dollar token could support wholesale, institutional and retail transactions, including cross-border payments and digital asset settlement. North American participants include Fidelity Investments, Capital One, Wells Fargo, PNC Financial Services, Scotiabank, TD Bank Group, and WisdomTree, alongside Bank of America, Citi, and Goldman Sachs. You might also like: 21-bank stablecoin has global backing, but can it rival USDT and USDC? Banco Santander, BBVA, Commerzbank, Crédit Agricole, Deutsche Bank, Lloyds Banking Group, Rabobank, and UBS represent Europe. MUFG Bank, Sirius International Holding, and Standard Bank complete the group. According to the official consortium announcement, the project intends to comply with the GENIUS Act and the European Union’s Markets in Crypto-Assets regulation where applicable. The group has not disclosed the token’s name, supported blockchains, reserve custodian, governance structure, or redemption terms. Under current U.S. stablecoin issuance rules, permitted issuers cannot pay interest or yield to holders. The federal framework also requires eligible payment stablecoins to carry one-to-one backing with approved liquid reserves, regular disclosures, and defined redemption rights. For Fisher, the restriction leaves a gap between creating a tokenized dollar and making it productive.