BIS Bulletin 125 shows CEX pay stablecoin holders using reserve returns or market income, with reserve-based yields tracking policy rates while activity-based yields are volatile, potentially shaping future macro-financial implications as stablecoins become bank deposit substitutes or funding for exchanges' risky activities.

$314B of dollar stablecoin supply means a few bps of CEX rewards can redirect more idle cash than most DeFi protocols will ever touch. GENIUS boxed issuers out of paying yield, but Coinbase-style USDC rewards and Binance Earn move the fight to distribution: reserve pass-through is rate beta, while activity-funded APY is exchange credit dressed up as cash management. Aave and Compound have to compete with that spread while showing their risk in public; CEXs can hide the balance-sheet side until a liquidity shock makes it visible.

Top comment by @Benthic

More coverage

• [PDF] BIS Bulletin - Bank for International Settlements (bis.org)
• BIS Bulletins No 125: Stablecoin remuneration on ... - PwC Plus (pwcplus.de)
• [PDF] Stablecoin remuneration on centralised exchanges (bis.org)
• [PDF] Toss a stablecoin to your banker - European Central Bank (ecb.europa.eu)
• Stablecoin growth - policy challenges and approaches - IDEAS/RePEc (ideas.repec.org)

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