Overview: What Is Indirect Interest
Indirect interest is a classification for consumer-facing reward features that resemble deposit interest, applied to stablecoin programs to align with banking-style rules.
Definition and Examples
Examples include yield labels, bonus accruals tied to reserve assets, or reward schedules mimicking interest credits. Labels and mechanics determine classification, not just outcomes.
Why Classify Rewards as Indirect Interest
To increase consumer protection and keep funding economics within familiar rails. It raises compliance requirements and discourages retail yield marketing.
Design Alternatives: Rebates and Discounts
Compliant designs include cash-equivalent rebates, fee waivers, and discount schemes that avoid interest characterization while preserving user value.
Rails Preference and Compliance
Account-based faster payments allow reversals and centralized compliance processes. Token rails provide faster finality and transparent receipts; designs must incorporate strong refund policies.
Implications for Users and Merchants
- Users: expect fewer yield labels, more rebates
- Merchants: define refund paths and reconcile via invoice IDs
- Issuers: emphasize short-duration reserves and disclosures
Conclusion
Indirect interest reframes consumer rewards under banking-style rules. With compliant designs, platforms continue delivering value while meeting policy goals.