Recent discussions surrounding U.S. stablecoin regulations highlight the implications for yield-bearing stablecoins. Under current regulations, stablecoins that offer yield are classified as securities, which disqualifies them from being marketed as payment stablecoins. This regulatory framework is seen as a barrier for U.S. stablecoin issuers, limiting their ability to compete with offshore alternatives that offer yield. Legalized yield-bearing stablecoins could potentially diminish the demand for traditional bank deposits, prompting banks to seek their own stablecoin issuance once regulations permit. Industry experts suggest that while stablecoin issuers are prepared to pass yield back to consumers, banks are more concerned about the competitive threat posed by these innovations.