# Federal regulators allow crypto interest rewards

> Federal bank regulators say crypto companies can keep paying interest-like rewards to customers.
- Title: Federal regulators allow crypto interest rewards | Shortify
- Summary: Federal bank regulators say crypto companies can keep paying interest-like rewards to customers. Federal regulators permit cryptocurrency exchanges to pass…
- Keywords: stablecoin, crypto exchanges, interest rewards, federal bank regulators, circle, coinbase, robinhood, usdc, savings accounts, deposit flight, news, local
- Source: Seattletimes — https://seattletimes.com/business/cryptocurrency-companies-can-keep-paying-interest-like-rewards-say-federal-bank-regulators
- Read time: 1 min
- Topics: stablecoin, crypto exchanges, interest rewards, federal bank regulators, circle, coinbase, robinhood, usdc, savings accounts, deposit flight, news, local
## Regulators permit crypto interest rewards
Federal regulators allow cryptocurrency exchanges to pass interest-like rewards to customers from stablecoin earnings.
## Stablecoin interest rules
Stablecoin issuers like Circle cannot pay interest to holders but exchanges such as Coinbase and Robinhood can pass along earnings from stablecoins to customers.
## Stablecoin earnings
Stablecoins are backed by bank deposits and U.S. Treasuries which earn interest to fund customer rewards.
## Yield comparison
Coinbase offers up to 3.5% yields on USDC balances versus 0.38% for traditional savings accounts.
## Deposit flight risk
If customers move savings to crypto exchanges they could reduce banks' lending capacity and cause bank failures.
## Banking industry concerns
The American Bankers Association says the rule threatens the funds banks use to make loans that drive the U.S. economy.
## Key takeaway

Federal regulators permit cryptocurrency exchanges to pass interest-like rewards to customers from stablecoin earnings.