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.
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.
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. A compliant issuer may improve how money moves without providing a return on cash held in the token.
Jiko’s 2026 Corporate Cash Confidence Survey illustrates the size of the existing cash problem. Conducted between April 13 and June 19 among 192 treasury professionals, the survey found that nearly half kept more than 10% of corporate cash uninvested at any given time. Another 23% said more than one-quarter of their cash regularly remained idle.
Liquidity still came before returns for the survey participants. Access to cash when required ranked as the leading priority for 60% of respondents, while 46% selected risk control and protection of principal. Yield ranked behind both considerations.
Independent DeFi protocols could supply the yield
Once a stablecoin enters a protocol outside the issuer’s control, Fisher said its return could come from overcollateralized loans, market makers financing inventory or other users paying to borrow the asset.
He compared the arrangement with the separation between a bank deposit and a money-market fund. Under his interpretation, the bank creates the dollar token while an independent venue puts it to work.
“The yield comes from what the cash is lent against, not from the bank that minted it,” Fisher said.
The source of the return determines whether the arrangement can last, according to Fisher. Interest paid by a borrower using the stablecoin represents economic demand, while rewards created through repeated issuance of a protocol’s governance token depend on a subsidy.
Infrastructure such as Katana’s VaultBridge protocol is designed to route stablecoins toward lending demand, Fisher said. His comments about the product represent Katana’s description of its own infrastructure rather than an independent assessment of its performance or risks.
The distinction also sits inside an active U.S. policy dispute. In January, American community bankers challenged indirect yield paid through exchanges and other third parties. The banks argued that such rewards could pull deposits away from local lenders even when stablecoin issuers did not pay the returns themselves.
Fisher’s model differs from a passive holding reward because it requires the token holder to place funds into a separate strategy. Returns would depend on lending or another income-producing activity rather than solely on ownership of the stablecoin.
Sustainable stablecoin yield needs identifiable demand
Treasurers evaluating an on-chain return should first identify who is paying to use the stablecoin, Fisher said. A named source of demand allows depositors to examine why a borrower needs the funds and which risks support the offered rate.
His second test concerns how the rate behaves. Lending returns should move with the supply of available dollars and borrower demand, while a fixed headline annual percentage yield may depend on a temporary incentive program.
Removing token rewards provides the third test. If the base return disappears when a protocol stops issuing incentives, Fisher said the advertised yield was a subsidy rather than income generated by the underlying activity.
“Any yield materially above the risk-free rate is a risk premium you’re being paid to bear. A treasurer should be able to name the specific risk they’re taking to earn it.”
Without an identifiable risk, Fisher said the return may come from a subsidy that will end or from an exposure the depositor has not priced. His tests do not establish whether a product is legally compliant, and the regulatory treatment would depend on its structure and the relationship between the issuer, protocol and holder.
DeFi yield leaves holders carrying the risk
Moving a bank-issued stablecoin into DeFi introduces exposures absent from simply holding the payment token, Fisher said. Smart contracts may contain exploitable code, while a failed or manipulated oracle can supply an incorrect collateral price.
Liquidity creates a separate problem during stress. Even when a protocol reports enough assets for normal redemptions, depositors may be unable to exit at par if many users withdraw at the same time.
Self-custody can also leave the holder without a chargeback or customer service route after an incorrect transaction or loss of account access. Counterparty failures and failed lending strategies add further paths to losses.
“In most DeFi, no issuer stands behind the strategy. If an independent protocol’s strategy fails, the loss generally sits with the depositor, not a bank, not a backstop.”
Audited code, liquid markets, and conservative collateral can reduce parts of the exposure, according to Fisher, but none turns an independent protocol into a bank guarantee. Eligible payment stablecoins are also not FDIC-insured deposits under the U.S. framework, although the law provides reserve, disclosure, redemption, and insolvency protections.
DeFi developers have raised a related concern about rules that could make issuers responsible for activity they cannot control. In June, Hyperliquid Policy Center and Paradigm warned that proposed secondary-market compliance duties could push regulated stablecoin liquidity toward permissioned or offshore platforms.
Corporate adoption depends on liquidity during stress
Fisher also rejected the idea that DeFi had already solved the problem of unproductive digital dollars. DefiLlama recorded approximately $305.3 billion in stablecoins and about $87.6 billion in DeFi total value locked at the time of reporting, leaving much of the stablecoin supply outside deposited DeFi capital.
Before treating a protocol as treasury infrastructure, companies would need transparent economic activity, predictable liquidity, conservative collateral, real-time reporting, and defined responses to failures, Fisher said. Operational requirements would include round-the-clock settlement and counterparties able to keep functioning under stress.
The advertised rate should not serve as the primary test, according to Fisher. He said treasurers need to examine the redemption route and determine how long an exit could take on a day when many other depositors are trying to withdraw simultaneously.
“Most treasurers underwrite the yield and inherit the redemption path by accident,” he said. Fisher added that corporate users should test stressed exit conditions rather than relying on the liquidity a protocol displays during normal trading.
