Overview: Spreads Exposed
Stablecoin APY tied to short-term rates highlights bank spreads, increasing user awareness and switching incentives for both retail and corporate treasuries.
Mechanics: APY vs Net Interest Margin
Banks pay depositors less than asset yields to maintain margins; market-linked APY narrows the narrative gap.
Responses: Raise Rates, Improve UX, Lobby
Banks can raise deposit rates, improve digital UX and reconciliation, or advocate rules that classify rewards as interest to increase compliance friction.
Design: Rewards, Rebates, and Compliance
Reward programs can be structured as rebates or fee discounts to comply while preserving user value.
Impacts on Banking Products
Expect more tiered APY, promotional offers, and messaging focused on safety and service integration.
Conclusion
Stablecoin APY challenges margins by aligning with market rates. Banks adapt with rate competition, UX, or policy.