While Congress was arguing about whether crypto companies should be allowed to offer yield on stablecoins, Coinbase went ahead and built the product anyway.
Coinbase Asset Management launched CUSHY on April 30, a tokenized credit fund that uses stablecoins as the distribution rail for institutional lending. The full name is the Coinbase Stablecoin Credit Strategy. It targets qualified investors and institutions with exposure to public credit, private credit, and what Coinbase calls “structural alpha” from tokenization and on-chain market structure.
The fund launches on Ethereum, Solana, and Base through Superstate’s FundOS platform, with Northern Trust handling administration and Coinbase Prime providing custody. Investors can hold tokenized shares on-chain, use them as collateral, and trade them 24/7.
The timing is deliberate. US banks have been lobbying Congress for months to block crypto companies from paying interest on stablecoin balances. CUSHY sidesteps that fight entirely, and that is the whole point.
What Is CUSHY and How Does It Work?
CUSHY is a credit fund, not a stablecoin. That distinction matters more than anything else about the product.
The CLARITY Act’s January draft includes a provision that would prohibit digital asset service providers from paying interest directly on stablecoin balances. Banks pushed hard for that language because they see yield-bearing stablecoins as direct competition for deposits. If USDC pays 4% and a savings account pays 0.5%, money moves from banks to stablecoins. Banks lose deposits. They lobbied to stop it.
CUSHY does not pay yield on a stablecoin balance. It lends capital to borrowers in the digital asset economy and distributes returns through a regulated fund structure. You are not earning interest on your USDC. You are investing in a credit fund that happens to use stablecoin infrastructure for settlement, shares, and distribution. That legal distinction likely places it outside the scope of the CLARITY Act’s proposed restrictions.
The fund targets three types of returns. Public credit through liquid digital economy instruments. Private and opportunistic credit through asset-based lending to both crypto-native and traditional borrowers. And structural returns from tokenization incentives and on-chain market positions.
COIN stock rose on the announcement, suggesting Wall Street sees the legal structure as sound.
Why Does Coinbase Care About Stablecoin Credit?
Because stablecoins are already Coinbase’s biggest moneymaker after trading fees. Coinbase earned $1.35 billion in stablecoin revenue in 2025, with subscriptions and services accounting for 41% of net revenue against total net revenue of $6.88 billion. Average USDC balances on the platform reached $17.8 billion.
Stablecoins are not a side project for Coinbase. They are close to being the core business. CUSHY takes that further by turning stablecoin infrastructure into an asset management product with recurring institutional relationships. Instead of just holding USDC and earning from the float, Coinbase is now lending it out through a regulated fund and collecting management fees on top.
The numbers back the thesis. Stablecoins processed over $33 trillion in transaction volume in 2025, surpassing Visa. An average of 89 million addresses held stablecoins daily across major blockchains. Citi projects stablecoin issuance reaching $1.9 trillion by 2030 in a base case and $4 trillion in a bull case.
What Makes the Tokenized Shares Different?
CUSHY is the first external fund issued through Superstate’s FundOS platform. Previously, FundOS only powered Superstate’s own internal funds: USTB (short-term US Treasuries) and USCC (crypto carry trade), which together hold over $1 billion in assets under management.
FundOS lets asset managers tokenize fund shares on Solana, Ethereum, and Base without building custom smart contracts from scratch. The tokenized shares use ERC-20 and ERC-4626 standards. Investors can hold them on-chain, use them as collateral in DeFi protocols, participate in lending transactions, and trade them around the clock.
That is genuinely new. A traditional credit fund issues paper shares that settle in two days and sit in a brokerage account. CUSHY issues digital shares that settle instantly and can be used as productive collateral across the DeFi ecosystem while you hold them. The underlying credit exposure is the same. The wrapper is fundamentally different.
Invesco, which manages over $2 trillion, recently adopted FundOS as well, suggesting this is becoming institutional infrastructure rather than a one-off experiment.
Why Are Banks Worried?
Because CUSHY proves that the stablecoin yield they are trying to ban through Congress can be delivered through fund structures they cannot ban. The CLARITY Act might stop Coinbase from paying interest directly on USDC. It cannot stop Coinbase from launching a regulated credit fund that uses USDC infrastructure for settlement and distribution.
Banks see the pattern clearly. If Coinbase succeeds with CUSHY, other crypto firms will launch similar products. Stablecoin holders will earn yield through fund wrappers instead of directly on their balance. The money still flows from bank deposits into stablecoin-based products. The competition banks are trying to eliminate through legislation reappears in a form the legislation does not cover.
CryptoSlate framed it well: “CUSHY fits Coinbase’s existing trajectory by converting stablecoin infrastructure into an asset management product with recurring institutional relationships.” Banks lobbied to stop the pipe. Coinbase just built a new pipe.
The question now is whether banks push for even broader restrictions in the CLARITY Act to cover fund structures like CUSHY. Senator Tillis is already threatening to kill the bill over Trump family crypto ethics. Adding another fight over fund wrappers could push the legislation past its already tight deadline of 9 working weeks before August recess.
What Does This Mean for Stablecoin Users?
CUSHY is only available to qualified institutional investors. Regular retail users cannot access it yet. But the product signals where the stablecoin market is heading.
Today, most people hold stablecoins as idle cash on exchanges. CUSHY shows that idle cash can be put to work through institutional credit markets using tokenized fund shares as the access layer. If the model works, expect retail versions within a year, either from Coinbase directly or from competitors who copy the structure.
The broader takeaway is that stablecoins are evolving from payment tokens into financial infrastructure. They started as a way to move dollars on a blockchain. Now they are becoming the settlement layer for institutional credit, the distribution rail for creator payments (Meta’s USDC payouts launched the same week), and the collateral backbone for tokenized funds.
Banks are right to be worried. They are just wrong about which specific product to worry about. It is not stablecoin yield. It is everything that gets built on top of stablecoin rails once the infrastructure is in place. CUSHY is one product. A hundred more are coming.
