Europe and the U.S. Both Now Design Digital Money That Cannot Earn

A foundation treasurer holding part of her reserves in a stablecoin, meaning a digital token engineered to hold a steady value of one dollar or one euro, has learned that the token pays her nothing for holding it, and she has filed that silence away as a property of the technology. The silence is a policy choice rather than a technical limit, and over the past week that choice became considerably firmer in two jurisdictions at once. The European Central Bank launched a settlement platform for a digital euro that by draft regulation cannot bear interest, and one day later the European system of central banks asked that the existing ban on paying interest on private stablecoins be widened rather than relaxed. In the United States the same outcome was already law, arrived at by a different route and defended on different grounds. What has been read as two systems drifting apart looks, on the current record, more like two systems reaching the same operational answer from opposite directions.

Take the American route first, because it is the more settled of the two. The stablecoin statute signed in July 2025 prohibits a permitted issuer from paying any form of interest or yield to a holder solely in connection with holding, using or retaining the token, and that prohibition is in force. The market-structure bill that would have extended the same logic to exchanges and platforms failed a procedural vote in the Senate on the fifteenth of September and is finished for this Congress, which was widely read as American policy stalling. The prohibition never depended on that bill. It sits in the statute, and the banking regulator implementing it proposed in late February to read it past the issuer to reach affiliates and related third parties, with a rebuttable presumption against arrangements that route a return to a holder through an intermediary. The stated concern in the American debate has been the effect of yield-bearing digital dollars on bank deposit funding and lending, and that concern is contested rather than settled.

The European route runs through different institutions and rests on different stated reasons. The Markets in Crypto-Assets Regulation, in force across the European Union since the end of 2024, prohibits the issuer of a stablecoin from granting interest to holders, and the scope of that prohibition is narrower than it first appears, because it binds the issuer rather than the other firms a holder might deal with. In May the European Commission opened a consultation asking whether the prohibition should be modified and under what conditions a holder could be paid, and extended the response window to the thirtieth of September. Reading only that, the reasonable inference was that Europe had opened a door.

On the twenty-second of September the European system of central banks answered, and the answer was not the one the consultation's framing invited. Their response states that remuneration should continue to be prohibited, and that the prohibition should not be limited to services governed by the crypto rulebook but should reach unregulated services including borrowing, lending and staking. The reasoning is that those arrangements reproduce the economic effect of interest while sitting outside the rule that bans it, and the filing names layered and tri-party structures as the circumvention it wants addressed. The same response asks for authority to prohibit new issuance and to require redemption of tokens judged to threaten financial stability, which would reach dollar-denominated stablecoins circulating inside the Union. It also asks that the fixed requirement to hold a set share of reserves in bank deposits be replaced with rules tied to how quickly reserve assets can be turned into cash, which is a loosening rather than a tightening and a useful reminder that the filing is not uniformly restrictive. The Commission has not decided, any change would require amending the regulation, and nothing is likely to move before 2027.

The week's other development is the one that shows what Europe is building toward. On the twenty-first of September the Eurosystem launched Pontes, a platform connecting distributed ledger systems to the central bank's existing settlement services so that tokenised transactions can settle in central bank money, with thirteen banks and several platform operators live at launch. Pontes serves financial institutions rather than the public, so it is not the retail digital euro, which remains years out. The design principle behind the retail instrument is the relevant part here, because the draft regulation states that the digital euro shall not bear interest, and the proposal pairs that with limits on how much any one holder may keep. The stated purpose is to make the digital euro function as a means of payment rather than as a place to store wealth, so that money does not migrate out of bank deposits in volume. Europe is therefore building a public digital currency designed not to earn, while its central bank argues that private euro tokens should not earn either.

Set the two routes side by side and the convergence is visible without either being endorsed. One jurisdiction reached the position by statute and is extending it by banking regulation, citing deposit funding. The other wrote it into its crypto rulebook first, is building it into its public currency by design, and is now defending it through its central bank, citing financial stability and monetary sovereignty. The instruments differ, the institutions differ, the reasoning differs, and the result for anyone holding charitable money on-chain is the same. What remains genuinely unsettled is whether any of this is good policy, because the evidence on how yield-bearing digital money affects bank lending is disputed and the European consultation is still open. What is no longer unsettled, for planning purposes, is the direction.

For nonprofit and foundation professionals, the practical consequence is that the reserve question can now be answered rather than deferred. An organisation holding stablecoins in either jurisdiction can treat the no-earn position as the working assumption for the foreseeable term, which means sizing on-chain balances to near-term spending and holding longer-horizon reserves in instruments built to produce a return. The uncertainty that justified waiting has largely resolved in one direction.

For digital and crypto-native giving leaders, the design consequence is sharper than it was a week ago, because the European filing addresses not only direct interest but lending, staking and indirect rewards, which are the mechanisms a giving product would most plausibly use to let a donor's undirected balance grow. A vehicle whose value to the donor depends on the balance earning is building on ground that regulators in both jurisdictions are actively firming up, so the durable design is one that earns its keep through speed, reach and verifiability rather than through return.

For donors and family-office advisors, the diligence question changes shape. It is no longer whether a given token pays and where, but whether any arrangement attached to it would survive a rule that presumes against intermediated returns in one jurisdiction and may soon reach ancillary services in the other. An advisor structuring cross-border giving can now treat the absence of yield as the baseline rather than as a feature to shop for.

For corporate giving and CSR leaders, the mapping work is unchanged in nature and clearer in outcome, because a giving budget held in stablecoins for rapid disbursement should be documented by issuing entity and governing regime. The convergence means a policy written for one jurisdiction will misfire less badly on the other than it would have a year ago, though the compliance obligations attached to each remain distinct.

For NGOs and international organizations, meaning nonprofits that move money or run programmes across country borders, the most consequential item is not the yield question at all. It is the requested authority to prohibit issuance and mandate redemption of tokens judged to threaten financial stability, because organisations working in places where local banking is thin often hold dollar-denominated stablecoins as working capital, and a tool of that kind would reach those holdings inside the Union. That authority does not exist yet and may never be granted in the form requested. An organisation holding such balances should nonetheless know whether it could convert them on short notice.

The practical move is to separate the two jobs charitable money does and stop asking one instrument to do both. Money that must move quickly across a border belongs on a rail built for settlement, and the fact that it earns nothing during the hours it sits there is now a design parameter rather than an open question. The harder case is the money in the interval between the gift and the grant, meaning the months or years a donated balance sits after the donor has irrevocably given it and before it reaches a working charity, because that interval is long enough for the absence of return to compound into a real number. An organisation that has been holding a single on-chain balance across both the hours and the years has been running an unexamined position, and the past week removed most of the ambiguity that made the position defensible.

"The question stopped being whether digital money would be allowed to earn, and became what a giving system should be built to do with a balance that sits between the gift and the grant earning nothing at all."EILEEN HERNANDEZ, THE STRATEGIC STEWARD

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This is a Technological Value Proposition question before it is a compliance question, because the worth of a giving rail is measured by what it lets charitable money do, and when two jurisdictions independently settle on money that moves well and waits poorly, the Digital Philanthropy Divide stops running between them and starts running between the organisations that have separated those two functions and the organisations that have not.