Tokenized T-Bills vs Stablecoin Yield: The Structural Challenge to the Float Model

Executive Summary

A non-yield-bearing stablecoin and a tokenized T-bill fund can hold the same underlying asset, short-dated US Treasury bills, and split the income in opposite directions. The stablecoin keeps the interest as issuer profit. The tokenized fund passes it to holders. That single difference is now a structural pressure on the stablecoin business model.

The numbers are large. Circle booked $733 million of Treasury-bill interest in one quarter. Tether cleared over $1 billion of net profit in Q1 2026 on roughly $141 billion of Treasury exposure. Meanwhile tokenized Treasury products crossed $11 billion in on-chain assets, paying holders roughly 4% to 5%. The GENIUS Act made the divide permanent by banning payment-stablecoin issuers from paying yield. The result: two legally distinct instruments. One is for settlement. The other is for return.

Key Takeaways

• Non-yield-bearing stablecoins run a float model: they hold reserves in short-dated Treasuries and keep the interest, while tokenized T-bill funds pass that same yield to holders.
• Tokenized US Treasury products crossed roughly $11 billion in on-chain assets by mid-2026, led by BlackRock’s BUIDL, Circle’s USYC, Ondo’s OUSG and USDY, Franklin Templeton’s BENJI, and Superstate’s USTB.
• The GENIUS Act, signed in July 2025, prohibits payment-stablecoin issuers from paying any interest or yield to holders, cementing the split between settlement tokens and yield instruments.
• The trade-off for holders is access: stablecoins settle for anyone with a wallet, while tokenized funds are securities gated by KYC and qualified-purchaser or accredited-investor checks with minimums up to $5 million.
• For issuers and asset owners, the practical lesson is structural: professional tokenization of a yield instrument requires legal wrapper, compliance architecture, and investor gating, not just a token.

Introduction: The Same Asset, Two Business Models

For most of the stablecoin era, the economics were simple and invisible to users. You deposit a dollar, you get a token worth a dollar, and the issuer invests your dollar in short-term US government debt. When rates are near zero, nobody notices. When Fed funds sits above 4%, the arithmetic becomes impossible to ignore.

The core fact of 2026 is that the yield on stablecoin reserves has become the single largest revenue line for the largest issuers. The overwhelming bulk ($733 million) of Circle’s Q4 revenue was generated by U.S. Treasury bill interest. That was 95% of Q4 revenue. On the other side of the market, Tether reported $1.04 billion in net profit for Q1 2026, lifted its reserve buffer to a record $8.23 billion, and disclosed roughly $141 billion in U.S. Treasury exposure.

That income exists because holders receive none of it. A dollar in USDC or USDT earns the holder nothing. The same dollar, routed instead into a tokenized Treasury fund built on infrastructure like Stobox Compass, can earn close to the risk-free rate. The gap between those two outcomes is the whole story of this edition.

Why Do Non-Yield Stablecoins Keep the Interest?

The short answer: their reserves are invested in Treasuries, and the law lets issuers keep the return while forbidding them from sharing it. This is the float model, and it is deliberate.

Both major issuers hold the bulk of reserves in short-dated government paper. The mix is roughly 80% Treasuries and 20% cash for USDC, held through a registered 2a-7 government money market fund managed by BlackRock and held at BNY Mellon. The fund holds U.S. Treasuries with weighted-average maturity under 60 days plus overnight repurchase agreements collateralized by Treasuries. Tether holds a comparable Treasury-heavy book at far larger scale.

The mechanism that keeps the yield with the issuer is now codified. The GENIUS Act, signed into law in July 2025, requires stablecoin issuers to maintain reserves backing outstanding stablecoins on at least a one-to-one basis. Critically, Section 4(a)(11) of the GENIUS Act prohibits PPSIs and FPSIs from paying the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin.

The policy rationale is explicit. One rationale for prohibiting yield is that if stablecoins were to offer competitive returns, households may shift dollars out of traditional bank accounts and into tokens. Congress chose to protect bank deposit funding over consumer returns on stablecoin balances. The effect is that after Section 4(c), USDC and USDT effectively became 0% yield instruments, high-velocity payment rails optimized for settlement, not return.

How Do Tokenized T-Bills Pass the Yield Back?

They invert the float model. A tokenized T-bill fund is a regulated fund holding short-duration Treasuries, and the interest accrues to token holders rather than to the issuer. That is the structural challenge.

The category has moved from experiment to infrastructure. The total on-chain tokenized Treasury market reached approximately $10.8 billion as of February 2026, up from $8.9 billion on 1 January 2026. By early March 2026, that figure had expanded further to approximately $11.13 billion. Yields track the underlying paper. These products offer investors predictable 4% to 5.25% APY backed by U.S. Treasury bills, with the added benefits of 24/7 settlement, fractional ownership, and full DeFi composability.

Here is a working definition worth keeping:

A tokenized T-bill fund is a regulated fund that holds short-duration US Treasury securities and issues blockchain-based tokens representing fractional ownership, passing the underlying Treasury yield to token holders rather than retaining it as issuer profit.

The mechanics differ by product, but the direction of yield is consistent. Consider BUIDL. BUIDL is a rebasing fund that maintains a stable $1.00 price, distributing yield as newly minted tokens. Its yield sits close to the policy rate. BUIDL yields closely track the Fed Funds rate minus a small management fee. That is exactly the income a stablecoin holder forgoes.

The Leading Tokenized T-Bill Products in 2026

On the largest products: as of May 2026, BUIDL holds approximately $2.5B in assets under management across six chains, making it one of the two largest tokenized US Treasury products alongside Circle’s USYC. Ondo’s structure shows how these funds interconnect. Ondo Finance’s OUSG holds BUIDL shares as its underlying asset and connects to DeFi protocols through a USDC redemption contract powered by Circle. Franklin Templeton’s product is structurally distinct: BENJI is the only one wrapping a US-registered ’40 Act mutual fund rather than a private fund structure. And Superstate’s fund holds paper directly: USTB is Superstate’s Short Duration US Government Securities Fund, a 3(c)(7) fund restricted to qualified purchasers. The fund holds short-dated T-bills directly rather than a wrapper product, which Superstate argues reduces fee drag.

What Is the Catch? The Access Gate

The catch is that tokenized T-bill funds are securities, not payment instruments, so they are gated. A stablecoin settles for anyone with a wallet. A tokenized fund checks who you are before you can hold it.

This is the honest counterweight to the yield story. Tokenized US Treasury funds look like on-chain stablecoins, but their access rules are closer to a traditional broker-dealer’s. Every major fund routes new subscribers through a KYC and accreditation check that decides minimum ticket size, lock-up period, and which secondary venues a wallet can touch.

The gating varies widely by product. KYC tiers across the largest tokenized Treasury funds run from BUIDL at $5M for qualified purchasers, to OUSG, USTB, and USYC at $100K, to BENJI at $20 retail, and USDY for non-US Reg S investors. The legal wrappers reflect that. BUIDL’s structure is a British Virgin Islands professional fund, registered under Regulation D Rule 506(c) for accredited US distribution, with Securitize serving as transfer agent and broker-dealer, handling subscriptions, redemptions, and the KYC pipeline.

That gating is not a bug. It is the reason these products stay inside securities law. The total tokenized-Treasury market crossed $11B in AUM by May 2026, and the gating logic is what keeps it inside US securities law. For a retail user who wants a spendable digital dollar, a stablecoin is still the right tool. For a treasury, fund, or accredited investor parking idle dollars, the tokenized fund captures yield the stablecoin cannot legally pay.

A Framework: The 5 Stages of Building a Yield-Bearing Tokenized Instrument

Understanding why stablecoins cannot simply flip a switch and pass yield requires seeing what a compliant yield instrument actually takes to build. This maps to the Stobox three-stage path: intelligence, capital-market readiness, and tokenization.

1. Intelligence and asset structuring. Define the underlying (short-duration Treasuries, repo, cash) and the fund vehicle. Verified, investor-ready data underpins everything downstream.
2. Digital transformation. Build the record-keeping, NAV, and reporting rails. BENJI proved a public chain can be a fund’s official system of record.
3. Legal preparation. Choose the wrapper and exemption (Reg D 506(c), 3(c)(7), Reg S, or a ’40 Act registration). This determines who can hold the token.
4. Capital strategy. Design distribution and investor access. This is where Raisable fits: connecting an investment-ready vehicle with the right qualified investor base.
5. Tokenization and lifecycle. Issue the security token, wire in KYC gating, manage subscriptions, redemptions, and secondary transfer rules through issuance infrastructure like Compass.

The lesson: a stablecoin is a payment instrument by design and by law. A yield instrument is a security. Turning one into the other is not a token swap. It is a full re-architecture, which is precisely why the two models now coexist rather than converge.

How to Act on This

The direct implication depends on who is reading. Here is the practical read by role.

For the CEO or CFO managing a corporate treasury. Idle dollars sitting in a non-yield stablecoin are a cost you are choosing to pay. If your entity qualifies, a tokenized T-bill fund converts that idle balance into yield near the risk-free rate while keeping on-chain settlement. Map your accreditation status first: the access gate is the deciding variable, not the yield.

For the asset owner or issuer. The demand for on-chain yield is real and growing, but the moat is structure, not the token. Most tokenization projects fail on the layer underneath: compliance architecture, investor onboarding, cap-table management, and secondary-transfer control. This is where Stobox Compass operates as the issuance and lifecycle layer, and where Raisable connects an investment-ready vehicle to qualified capital. Learn the mechanics before you build in our knowledge base.

For the investor. Treat the two instruments as different tools. Stablecoins are for settlement and liquidity. Tokenized T-bill funds are for yield, subject to eligibility. Read the wrapper: a ’40 Act fund, a BVI professional fund, and a Reg S product carry different rights and different redemption mechanics. This is educational analysis, not investment advice.

FAQ

What are tokenized T-bills? Tokenized T-bills are blockchain-based tokens representing fractional ownership in a regulated fund that holds short-duration US Treasury securities. Unlike a non-yield stablecoin, the fund passes the Treasury yield to token holders. Leading examples in 2026 include BUIDL, OUSG, BENJI, and USTB.

How do tokenized T-bills differ from stablecoins? Both can hold the same underlying Treasuries, but the yield flows differently. The yield earned on stablecoin reserves used to flow back to the issuer as profit; the GENIUS Act asked what happens if some of that yield could legally flow to the holder instead. Stablecoins keep the yield and stay open to anyone; tokenized funds pass the yield but gate access.

Why can’t stablecoins just pay yield to holders? Because federal law prohibits it. Permitted issuers cannot pay holders interest or yield for simply holding the coin. The prohibition is designed to keep payment stablecoins distinct from bank deposits and money market funds.

How much yield do tokenized T-bill funds pay? Yields track short-term Treasury and Fed funds rates. In 2026 that has meant roughly 4% to 5% APY, less a small management fee. BUIDL yields closely track the Fed Funds rate minus a small management fee, so when T-bill rates rise, BUIDL yields rise.

Who can buy tokenized T-bills? It depends on the product’s legal wrapper. Access ranges from BUIDL at a $5M qualified-purchaser minimum, to OUSG and USTB and USYC at $100K, to BENJI at a $20 retail minimum, to USDY for non-US Reg S investors. Each requires KYC.

What is the GENIUS Act and why does it matter here? It is the 2025 US federal law governing payment stablecoins. The GENIUS Act creates a licensing and reserve framework for “payment stablecoins,” a digital asset an issuer must redeem at a fixed value, used for payment or settlement. It bans those issuers from paying yield, which is what separates them structurally from tokenized funds.

Are tokenized T-bills risky? The underlying US government debt carries minimal credit risk, but the token layer adds its own. The tokenized layer introduces counterparty, smart contract, and redemption-delay risk; the strength of a token holder’s claim depends on the legal structure, specifically whether the SPV provides bankruptcy remoteness. Read the wrapper carefully.

Can companies tokenize their own T-bill or yield product? Yes, but it requires a full compliance and issuance stack, not just a token. The process spans asset structuring, legal wrapper, KYC gating, and lifecycle management. Infrastructure providers like Stobox Compass handle the issuance and secondary-transfer layer, while Raisable supports investor access.

Is USDY effectively a yield-bearing stablecoin? Structurally it is closer than any other product. USDY is open to non-US retail in supported jurisdictions and is the most directly comparable to a yield-bearing stablecoin from an access standpoint. But it remains a security with its own gating, not a payment stablecoin.

Will regulators close the yield gap? The debate is active. The OCC’s proposed rules would expand the GENIUS Act’s prohibition on paying interest or yield to stablecoin holders, applying the prohibition to affiliates and third parties, not just issuers. The direction of travel is toward keeping payment stablecoins yield-free, which preserves the structural role of tokenized funds.