Crypto Yield Gap Narrows as GENIUS Act Boosts Stablecoins, RWAs

A comprehensive new report co-authored by RedStone Oracles, Gauntlet, Stablewatch and the Tokenized Asset Coalition reveals a stark contrast in passive income opportunities between cryptocurrency and traditional finance. The research, shared with Cointelegraph, found that only 8% to 11% of cryptocurrencies offer passive yield-generating models, compared to 55% to 65% of traditional finance assets. This represents roughly a fivefold disparity, highlighting the significant gap that has existed between decentralized finance and established financial markets.

The data underscores the relative immaturity of yield-generating mechanisms within the cryptocurrency ecosystem. While traditional finance has long offered investors numerous avenues for passive income through dividends, interest-bearing accounts, and bond yields, the crypto space has been playing catch-up. This gap has been particularly pronounced in decentralized finance, where the focus has historically been on trading and speculation rather than income generation.

Despite the significant yield gap, the report identifies three key sectors that are rapidly closing decentralized finance’s passive income deficit: stablecoins, liquid staking tokens (LSTs), and real-world assets (RWAs). These blockchain-based sectors are creating new pathways for investors to generate yield while maintaining exposure to the cryptocurrency ecosystem. The emergence of these yield-bearing assets represents a fundamental shift in how investors can participate in decentralized finance.

Liquid staking tokens have emerged as a particularly innovative solution, allowing cryptocurrency holders to stake their assets while maintaining liquidity through tokenized representations of their staked positions. Meanwhile, real-world assets are bringing traditional income-generating investments like real estate, commodities, and corporate debt onto blockchain platforms. Stablecoins, traditionally seen as simple dollar-pegged assets, are increasingly incorporating yield-generating features that compete with traditional savings accounts and money market funds.

The report specifically highlights “blue-chip” yield tokens as playing a crucial role in this convergence. These established, reputable tokens with proven yield-generating capabilities are attracting institutional and retail investors who previously viewed cryptocurrency primarily as a speculative asset class rather than an income-generating one.

The historic approval of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act in July 2024 is proving to be a significant catalyst for the yield convergence trend. The legislation established clear rules for stablecoin collateralization and mandates compliance with Anti-Money Laundering laws, providing much-needed regulatory certainty for market participants. This regulatory framework is creating a more stable environment for yield-bearing crypto products to develop and gain mainstream acceptance.

The GENIUS Act’s impact is already being felt across the industry, with the report noting rising demand for both yield-bearing stablecoins and RWAs following the legislation’s passage. By establishing clear collateralization requirements, the act addresses one of the key concerns that has limited institutional participation in crypto yield products. The mandatory Anti-Money Laundering compliance further legitimizes these assets in the eyes of traditional financial institutions and regulators.

This regulatory clarity is particularly important for real-world assets, which often involve complex legal structures and compliance requirements. The framework provided by the GENIUS Act gives RWAs a clearer path to market and helps bridge the gap between traditional finance’s regulatory environment and the emerging world of tokenized assets. The result is accelerated development and adoption of yield-generating crypto products that can compete with their traditional finance counterparts.

The convergence between cryptocurrency and traditional finance yield products represents a fundamental maturation of the digital asset ecosystem. As stablecoins, liquid staking tokens, and real-world assets continue to evolve, they’re creating a more diverse and sophisticated landscape for passive income generation. The regulatory foundation provided by legislation like the GENIUS Act is enabling this evolution by creating the stability and certainty needed for broader adoption.

While the fivefold yield gap highlighted in the report remains substantial, the trend toward convergence appears strong and sustainable. The combination of technological innovation in sectors like LSTs and RWAs, coupled with supportive regulatory developments, suggests that cryptocurrency’s yield-generating capabilities will continue to approach parity with traditional finance. This evolution is transforming cryptocurrency from a purely speculative asset class into a legitimate component of diversified investment portfolios seeking both growth and income.