Coinbase Global Inc. and PayPal Holdings Inc. are pressing ahead with reward programmes that pay customers annual returns on their dollar-pegged tokens, despite a new U.S. law that bars stablecoin issuers from offering yield. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, signed on 18 July, prohibits issuers from paying interest to holders in an effort to ensure the tokens function as payment instruments rather than investment products. Coinbase is advertising 4.1% annual rewards on USD Coin (USDC), while PayPal is offering 3.7% on its own PYUSD stablecoin. Executives say the programmes comply with the law because neither company is the legal issuer of the tokens: Circle issues USDC, and Paxos Trust Co. issues PYUSD. “We are not the issuer, and we don’t pay interest—we pay rewards,” Coinbase Chief Executive Officer Brian Armstrong told analysts on an earnings call. PayPal CEO James Alexander Chriss offered a similar defence during his company’s results briefing. Critics argue the approach exploits a loophole and could weaken the intent of the legislation, which was crafted to separate stablecoins from bank-like deposit products. Backers of the firms counter that the statute was deliberately limited to issuers, leaving secondary-market incentives outside its scope. The dispute comes as the stablecoin market swells to roughly $275 billion, increasing pressure on regulators and industry players to clarify how interest-like payments should be treated.