If the legislative stalemate on stablecoin yield continues, the yield gap will move offshore, leading to the rise of 'wrapper products' (DeFi liquidity tokens) that offer yield on stablecoins indirectly, bypassing US regulations.
"In this world, the innovation exemption promised by the SEC might protect some players, but the big banks stay on the sidelines. The yield gap remains, but it moves entirely offshore. We will see the rise of rapper products. You won't earn yield on your USDC directly. Instead, you will wrap it in a DeFi liquidity token that just happens to pay 4% APY. Technically, complying with the law while giving the middle finger to the banks. Innovation always finds a workound."
