Yield-Bearing Stablecoins and Tokenized Money Market Funds Explained

Why This Category Is So Badly Explained

Someone says yield-bearing stablecoin and could mean four structurally different things: a token that forwards reserve interest, a regulated money market fund share, a DeFi savings wrapper, or a hedged derivatives position wearing a dollar costume. These have different backing, different holders, different legal wrappers, and radically different ways of losing money.

The most common casualty is an investor holding a synthetic dollar believing they own the equivalent of a Treasury bill fund. They do not. Getting the taxonomy right is the valuable part here, so this guide explains the distinctions first and only then compares instruments. For the wider landscape, our state of stablecoins overview covers the payment tokens themselves.

The Four Things People Call Yield-Bearing Dollars

Rebasing Versus Accruing

Once a token pays a return, it has to express that return somehow, and there are two conventions.

A rebasing token holds its price near one dollar and increases the token count in your wallet. Franklin's BENJI accrues yield daily via newly minted tokens airdropped to shareholder wallets; Ondo's rUSDY subdivides into additional tokens on a daily rebase.

An accruing token keeps your balance fixed and lets the redemption price climb. USTB reflects return as a continuously increasing NAV per share, USDY through an increasing redemption price, USYC through rising token price.

Ondo running both USDY and rUSDY on identical underlying exposure proves this is a packaging choice, not an economic one. Practically, rebasing balances confuse DeFi contracts that assume fixed balances, while accruing tokens compose cleanly but no longer trade at a tidy dollar. Tax treatment can diverge too.

The Regulatory Line, and Why It Explains the Whole Market

The GENIUS Act framework is why this market is shaped the way it is. Section 4(a)(11) of the GENIUS Act prohibits a permitted payment stablecoin issuer 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 that stablecoin.

So if you want to pay holders a return, you cannot be a payment stablecoin: you must be a fund, a note, or offshore. That single sentence of statute explains the shape of everything below.

The boundary is still contested at the edges. Per Sullivan and Cromwell's analysis, the OCC issued a notice of proposed rulemaking on 25 February 2026, comments due 1 May 2026, adding a rebuttable presumption of violation where an issuer arranges for an affiliate or related third party to pay yield to holders. That is a proposed rule, not a final one, and the treatment of exchange rewards programmes remains unsettled as of this writing.

How This Guide Was Built

This is an editorial synthesis, not a first-party test. We did not buy, hold, or redeem any of these instruments, and we make no performance claims.

Backing, eligibility, fees, chains and redemption mechanics come from each issuer's own documentation: Superstate and Invesco for USTB, Ondo for USDY and OUSG, Circle for USYC, Franklin Templeton for BENJI, Sky's developer docs for sUSDS, Ethena's risk docs for USDe. Market size and trailing yield were read from RWA.xyz on 18 July 2026.

Where an issuer page and a tracker disagreed we deferred to the issuer. For USYC, RWA.xyz reported roughly 3.00 billion dollars while Circle's own USYC page stated 312,976,695 dollars for the same asset on the same date — an order-of-magnitude gap. We use Circle's figure, which also means the tokenized-Treasury total below should be read as a tracker aggregate that may itself be overstated. Every number below carries a date; anything unsourced has been omitted.

The Comparison

Market size and trailing yield, read from RWA.xyz on 18 July 2026, when the tokenized Treasury market totalled roughly 15.98 billion dollars across 85 assets by that tracker's count (see the USYC caveat above before treating that total as precise):

Seven-day annualised figures are noisy by construction, which may be why USTB's reads lower than its peers in this snapshot; do not treat one week as a running yield. Ethena is deliberately absent because it is not a tokenized Treasury product.

1. BlackRock BUIDL — Best for institutional balance sheets

Best for: large institutions that want the most recognisable issuer credit on-chain.

BUIDL is the BlackRock USD Institutional Digital Liquidity Fund, tokenized by Securitize, which acts as transfer agent and placement agent. It pays daily accrued dividends to holders as tokens.

• Backing: cash, US Treasury bills and repurchase agreements
• Eligibility: qualified purchasers, allow-listed wallets
• Chains: per RWA.xyz, Ethereum, Avalanche, Solana, BNB Chain, Optimism, Arbitrum, Aptos and Polygon
• Scale: roughly 2.60 billion dollars across 112 holders, per RWA.xyz on 18 July 2026

Limitations: the holder count tells the story. This is an institutional instrument with high minimums; we could not verify a current minimum subscription figure and do not state one.

2. Circle USYC — Best for non-US institutional collateral

Best for: non-US trading firms wanting yield-bearing collateral that settles fast.

USYC represents a share in the Hashnote International Short Duration Yield Fund, a Cayman-registered fund with Circle International Bermuda Limited as token administrator. Circle positions it as collateral rather than a savings product.

• Backing: short-term US government securities and reverse repo
• Eligibility: non-US persons only, 100,000 dollar minimum
• Chains: Ethereum, Solana, BNB, Canton and NEAR
• Redemption: USDC in and out, settling within a block below the instant-redemption threshold, T+0 or T+1 above it

Limitations: firmly closed to US persons, and the AUM discrepancy noted above means you should confirm scale with Circle.

3. Ondo USDY — Best for non-US individuals

Best for: non-US retail holders who want T-bill-like yield without a qualified purchaser test.

USDY is a tokenized note rather than a fund share, which makes it the most accessible instrument here for individuals outside the US.

• Backing: short-term US Treasuries, shares of a short Treasury bond ETF, or bank demand deposits depending on issuance date
• Eligibility: excludes US persons under Regulation S; several jurisdictions add professional or accredited investor tests
• Chains: Ethereum plus Solana, Sui, Aptos, Stellar, XRP Ledger and others
• Scale: roughly 2.16 billion dollars across 15,488 holders, per RWA.xyz on 18 July 2026

Limitations: the eligibility matrix is more restrictive than the permissionless transferability suggests, and the note wrapper means issuer credit risk, not a ring-fenced fund share.

4. Ondo OUSG — Best for instant redemption at fund grade

Best for: onboarded institutions that need to move in and out around the clock.

OUSG holds shares in Treasury funds run by BlackRock, Franklin Templeton, WisdomTree and Fidelity, plus bank deposits and USDC for liquidity.

• Eligibility: qualified access, onboarding required; tokens transfer freely between onboarded investors
• Redemption: instant 24/7 with a 5,000 dollar minimum subject to daily limits; non-instant requests from 50,000 dollars
• Fees: 0.15 percent management fee, waived until 1 January 2027 per Ondo's docs
• Scale: roughly 477.8 million dollars across 59 holders, per RWA.xyz on 18 July 2026

Limitations: a fund of funds, so you inherit a second layer of managers, and instant redemption capacity is capped daily.

5. Invesco USTB — Best for accredited US investors

Best for: US accredited investors and qualified purchasers wanting same-day Treasury exposure on-chain.

This one changed hands recently. Per a PRNewswire announcement dated 24 March 2026, Invesco Advisers became investment manager of Superstate's tokenized short-duration Treasury fund, which had over 967 million dollars in AUM at announcement. The fund was renamed the Invesco Short Duration US Government Securities Fund on completion in Q2 2026, keeping the USTB ticker, and Superstate's asset page now lists Invesco Advisers as manager. Note that the fund is smaller in our 18 July 2026 snapshot below than at that March announcement, so treat both figures as dated points rather than a trend.

• Eligibility: accredited investors and qualified purchasers
• Chains: Ethereum, Solana and Plume, or book-entry via Superstate
• Fees: up to 0.15 percent annually, with a monthly rebate of 0.10 percent for average holdings above 25 million dollars
• Redemption: same-day, with immediate USDC payouts and a 1pm ET wire cutoff for same-day USD

Limitations: the manager transition is recent, so read current fund documents rather than older write-ups; the fee rebate only benefits very large holders.

6. Franklin Templeton BENJI — Best for US retail access

Best for: US investors who want a conventional registered fund that happens to be on-chain.

BENJI is the on-chain share token of FOBXX, the Franklin OnChain US Government Money Fund, and the rare product here reachable through a retail app.

• Backing: US Treasury securities, repo and cash
• Eligibility: retail via mobile app, institutional via web platform, inside a US-registered fund
• Chains: nine networks per Franklin's site, including Stellar, Polygon, Arbitrum, Avalanche, Aptos, Ethereum, Base, Solana and BNB Smart Chain
• Mechanism: yield accrues daily through newly minted BENJI airdropped to shareholder wallets

Limitations: on-chain composability is limited compared with a freely transferable token, and published AUM varies widely between sources, so we cite only the RWA.xyz snapshot.

7. Sky sUSDS — Best for DeFi composability

Best for: on-chain users who want a savings position that plugs into other protocols.

sUSDS is not a fund and holds no direct claim on a Treasury portfolio. It is an ERC-4626 vault token accruing the Sky Savings Rate, funded from Sky protocol revenue.

• Mechanism: non-rebasing; the USDS-per-sUSDS exchange rate rises continuously
• Rate: Sky's site displayed a 3.60 percent APY on 18 July 2026, variable and set by SKY governance rather than market utilisation
• Eligibility: permissionless on-chain, though Sky's front end states it is currently unavailable in the US

Limitations: the rate is a governance decision, not a market outcome, and your risk is the whole Sky protocol. On how these on-chain rates are generated, see our DeFi lending explainer.

8. Ethena USDe and sUSDe — The synthetic contrast

Best for: understanding what this category is not.

USDe is a synthetic dollar: collateral held long, hedged with short perpetual futures so the net position is delta-neutral. Staking USDe into sUSDe entitles you to protocol revenue from funding payments and collateral staking yield.

• Backing: hedged crypto collateral, not a reserve of government securities
• Yield source: perpetual funding plus staking income, a function of crypto market positioning
• Disclosed risk: Ethena's docs report that combining staked ETH income with ETH funding produced negative days about 8.84 percent of the time in its sample, with a longest observed consecutive negative streak of 13 days, absorbed by a reserve fund

Limitations: exchange counterparty, custody and funding risk are all live and structural. We publish no current supply or APY figure, having been unable to retrieve one from a primary tracker at the time of writing.

Which Should You Choose?

Start with eligibility, because it eliminates most options before preference matters.

If you are US retail, BENJI is realistically the only open door, and it comes with the reassurance of a registered fund. If you are a US accredited investor or qualified purchaser, USTB and OUSG open up, with OUSG the better fit for round-the-clock redemption and USTB for a large traditional manager with same-day settlement. If you are a large institution, BUIDL offers the most recognisable issuer credit.

If you are non-US retail, USDY is the most accessible reserve-backed option, with rUSDY if you prefer a stable-price token. Non-US institutions using collateral are USYC's target. DeFi-native users get the most from sUSDS, taking protocol risk instead of fund risk.

If you are considering sUSDe, treat it as a separate decision: it is a crypto-market-linked strategy, to be sized against your crypto risk budget, not your cash allocation. For broader context, see our guides to tokenized RWA protocols and real-world asset tokenization.

Risks You Must Price In

Depeg and NAV risk. Accruing tokens are not trying to hold a dollar, so the risk is NAV impairment rather than a visible depeg. Rebasing tokens and synthetic dollars do target a dollar and can trade below it when redemption capacity is strained. Market price and redemption value are not the same thing.

Redemption gating. The most underrated risk here. Instant redemption windows are capped, minimums apply, wire cutoffs are real, and fund documents generally permit suspending redemptions under stress. Yield is worthless if you cannot exit when you need to.

Counterparty and custody risk. Every instrument depends on entities you cannot see on-chain: custodians, administrators, transfer agents, banks holding deposits, and for Ethena the exchanges holding the hedge.

Smart contract risk. Allow-list logic, rebase contracts, wrappers and vault accounting are all code that can fail or be exploited; audits reduce this risk without eliminating it.

Negative funding, for synthetics only. Sustained negative funding means Ethena pays rather than collects. It discloses historical negative periods and maintains a reserve fund, but a buffer is not a guarantee, and a long enough adverse period is a genuine impairment scenario.

Regulatory risk. The OCC rule above is proposed, not final, and the treatment of affiliate and exchange reward arrangements could change how some products are distributed.

This is not financial advice. Nothing here recommends buying, holding, or redeeming any instrument. These products carry real risk of loss, eligibility rules are legally binding, and the yields shown are historical snapshots that will not persist. Read the offering documents and consult a qualified adviser before committing capital.

Conclusion

The useful mental model is one question: where does the yield actually come from? Interest on a reserve of government securities means a tokenized Treasury product, and your job is to check the wrapper, the eligibility, and above all the redemption terms. Protocol revenue set by governance means protocol risk. Derivatives funding means a basis trade, however stable the dollar sign on the front looks.

The regulatory line explains the rest. Because payment stablecoin issuers are barred from paying holders interest, every product that does pay you has been pushed into a fund, a note, or an offshore structure. That is why so much of this category is gated, and expect it to stay that way until the rules change.

This is an editorial synthesis of documentation, public data, and community reports; see our [methodology](/methodology). Verify current details with each project.