FBO accounts and customer funds: who earns the interest

A US FBO account earns bank interest on customer dollars, and the program agreement sets the fintech's share. Stablecoin balances sit outside it and can earn in a vault, where the return goes to whoever holds the vault shares.

Imagine your app holds $50 million of customer money in an FBO account at a sponsor bank, and the month-end statement shows interest that never reaches a customer. A US FBO account (short for "for benefit of") earns interest for the bank that holds it, and the fintech receives whatever share its program agreement sets. Platforms pay customers a return on that dollar balance through sponsor banks such as Column, sweep networks such as IntraFi or T-bill accounts from Jiko. Stablecoin vaults such as Upshift work on a different balance: stablecoins the platform or its customers hold. A platform can run both at once. A dollar earns vault yield only after it's converted to stablecoins, and at that point it has left the FBO account and its FDIC cover.

In Europe, e-money institutions must safeguard customer funds and may not pay holders interest on e-money, under Article 12 of the E-Money Directive. Stablecoin balances bring their own rules: the GENIUS Act bars US issuers from paying holders interest, and MiCA bars issuers and crypto service providers from granting interest on e-money tokens.

Providers that hold customer balances or pay a return on them

Banks and sweep networks handle dollars in deposit accounts. Tokenized funds, issuer programs and vaults handle balances held as tokens.

Interest in an FBO account goes to the bank first

An FBO account is one pooled account, opened in a bank's or fintech's name for the benefit of the fintech's customers. The FDIC treats the money as each customer's for pass-through deposit insurance only if the account records show the custodial relationship, the owners and their shares can be identified, and the customers really own the funds. The bank pays any interest to the account holder of record. Whether customers see some of it is a commercial choice the fintech makes.

Column, a nationally chartered bank, says in its developer docs that it supports "FBO, sweep, clearing and custom account types" and serves as "the ledger and system of record" for customer accounts. A platform on Column can set an interest configuration on each account it opens. Unit offers FBO wallets through FDIC-member partner banks and doesn't list interest on balances on its site. Middleware programs negotiate the interest split with the bank, and providers rarely publish the share a fintech gets.

A fintech that collects a fee or rate share from a bank may count as a deposit broker, which makes the deposits "brokered" and more costly for the bank to hold. The FDIC proposed widening that definition in 2024, then withdrew the proposal on 3 March 2025, saying its treatment of fees was overly broad.

The FDIC's custodial accounts proposal, published after the Synapse failure, would make banks keep a record of each beneficial owner's balance. It would also require daily reconciliation and an annual independent check. As of October 2026 it hadn't been finalised. Our list of BaaS providers covers who keeps the ledger at each bank.

A program agreement usually answers these points in writing:

• What rate the bank pays on the FBO balance, and how it moves when the Fed changes rates.
• What share of that interest goes to the fintech, and whether any of it can be paid to customers.
• Who keeps the ledger of record.
• Whether the fintech's compensation makes the deposits brokered under FDIC rules, which the bank's counsel decides.

Cash sweep programs pay customers a rate the program sets

A sweep moves cash from a brokerage or app account into deposit accounts at one or more program banks, or into a money market fund. The program sets the rate the customer earns. The gap between that rate and what the banks pay is revenue for the broker or the fintech, and it can be large.

In January 2025 the SEC fined Wells Fargo and Merrill Lynch $60 million over their advisory cash sweep programs. Both had set the rates on their bank deposit sweeps themselves. For most advisory clients, the sweep was the only option offered. When rates rose, the gap between those sweeps and other cash options grew to almost 4% at times. The firms were censured. Neither admitted or denied the findings.

IntraFi says 64% of US banks take part in its network. Its ICS and CDARS services split a large deposit into pieces under the $250,000 FDIC limit and place them at network banks, giving a depositor "millions in aggregate FDIC insurance" through one relationship. The rate comes from the bank that places the money.

Jiko takes another route: its API invests customer cash in Treasury bills "in the client's name", through Jiko Bank (a division of Mid-Central National Bank) and Jiko Securities, a FINRA-registered broker-dealer. Jiko says it has opened 130,000+ accounts and traded more than $10 billion in T-bills.

A fintech offering a sweep usually keeps the spread and publishes only the customer rate. We see this most with card and payroll programs, where the float belongs to the program and the customer rate is set by marketing. How card programs earn yield on customer float covers the settlement side.

EU and UK safeguarding rules keep e-money interest away from the holder

Article 7 of the E-Money Directive (2009/110/EC) requires an e-money institution to safeguard the funds it receives, using the same methods the payment services rules give payment institutions. Under Article 10 of PSD2, a firm either keeps customer funds in a separate account at a credit institution, invests them in secure, low-risk assets, or covers them with an insurance policy or bank guarantee.

The E-Money Directive defines those assets as items with a specific risk capital charge of no more than 1.6%, plus UCITS funds investing only in them. Article 12 then says member states "shall prohibit the granting of interest or any other benefit related to the length of time" a holder keeps e-money.

Safeguarded funds can earn income, from bank interest or the low-risk assets. The holder can't receive a benefit tied to holding time, and in practice the institution keeps that income (our reading of Articles 7 and 12, not a regulator's statement).

An EMI that wants customers to earn usually moves the balance out of e-money into a separate product. Wise's Interest feature puts customer money into a money market fund offered with BlackRock through Wise Assets. Wise says the capital is at risk and the investment is eligible for up to £85,000 of FSCS protection, an investment-scheme limit.

The EU is replacing both directives. Lawmakers reached political agreement on PSD3 and the Payment Services Regulation on 27 November 2025, and the Council published final texts on 23 April 2026. PSD3 folds e-money institutions into the payment institution regime. It also lets firms safeguard at a central bank where that central bank agrees. The Parliament's indicative plenary date is 14 December 2026, with Official Journal publication after that. The MiCA licence guide covers the crypto side of EU authorisation.

In the UK, the FCA's PS25/12 rules took effect on 7 May 2026. Payment and e-money firms now hold customer funds under a statutory trust, reconcile them every business day, file monthly safeguarding returns and, for many firms, get an annual audit. ClearBank, which provides safeguarding accounts and the acknowledgement letters the FCA requires, says it keeps all sterling customer funds at the Bank of England.

Stablecoin balances add issuer rules on top

Section 4(a)(11) of the GENIUS Act says no permitted issuer "shall pay the holder of any payment stablecoin any form of interest or yield" solely for holding, using or keeping it. The Act takes effect on 18 January 2027 or 120 days after final rules, whichever comes first.

The OCC's proposed rule of 2 March 2026 goes further than the statute. It presumes an issuer breaks the ban if it pays an affiliate or related third party that then pays holders. Comptroller Jonathan Gould has said the OCC aims to finalise its rule by November 2026.

Platforms sit in a different spot from issuers. The Congressional Research Service has noted the Act places no restriction on exchanges paying interest to customers, and the CLARITY Act, which would have narrowed that, failed a Senate cloture vote 49-50 on 15 September 2026.

Paxos pays platforms through its Global Dollar Network, where partners receive "up to 100% of the returns generated by assets backing USDG held on your platform". In the EU, Article 50 of MiCA bars issuers and crypto-asset service providers from granting interest on e-money tokens, including any benefit tied to holding time paid by third parties.

A stablecoin vault earns from what it holds, such as loans or tokenized Treasuries, and the return goes to whoever holds the vault shares. Tokenized funds pay the same way, with eligibility limits: on 23 September 2026 BlackRock's BUIDL took US qualified purchasers investing at least $5 million. Whether a given Earn product sits inside a local interest rule is a question for the platform's counsel. How the GENIUS and CLARITY Acts reshape stablecoin yield goes through the US debate.

The four arrangements side by side

In the diagram, each column is a separate place a balance can sit, and a platform often uses more than one. The sponsor bank, the sweep program and the safeguarding institution each collect the income first and decide what to pass on. In a stablecoin vault the return lands on the vault shares, and the platform takes its cut through a fee it sets.

Where Upshift fits for platform-held stablecoin balances

Upshift is onchain yield infrastructure for fintechs and asset managers with stablecoin balances. A platform can start with a vault holding 24/7 tokenized money market funds and add lending or other onchain strategies later on the same integration, choosing Conservative, Core or Enhanced vaults. Professional curators run each vault inside set limits (Sentora is one, and the rest are typically hedge funds or asset managers).

The @augustdigital/sdk package gives one client for EVM chains, Solana and Stellar, where Upshift vaults held about $30 million and $9 million respectively on 4 October 2026.

For a payments company that needs per-merchant or per-client segregation, Upshift can deploy whitelisted or sole-depositor vaults, where only approved wallets hold shares. Segregated vs co-mingled vault accounts explains the trade-off with liquidity. The contracts have been through 11 smart contract audits by 6 independent firms, and partners launch vaults in their own app through Vault-as-a-Service with a fee share.

Every vault processes redemptions daily, each with its own lag. Most also offer instant redemption for a fee, subject to liquidity. More than 66,000 depositors hold Upshift vaults across partner apps.

Vault yields vary and aren't guaranteed. Vaults carry smart contract, strategy and liquidity risk, and stablecoins in a vault have no deposit insurance.

Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

Can a fintech earn interest on customer funds held in an FBO account?

Yes, through its contract with the sponsor bank. The bank pays interest to the account holder of record and shares an agreed part with the fintech. A fintech paid for placing deposits may make them brokered deposits under FDIC rules, which the bank's counsel reviews.

How do EU payment and e-money institutions safeguard customer funds, and can safeguarded funds earn yield?

They keep funds in a segregated account at a credit institution, invest them in secure low-risk assets, or insure them. Those funds can earn bank interest or asset income. E-money holders can't receive interest tied to holding time, though they can move money into a separate investment product such as a money market fund.

How do fintech cash sweep programs share interest with customers?

The program sweeps cash to partner banks or a fund, pays customers a rate it sets, and keeps the spread. IntraFi's network spreads deposits across banks for wider FDIC cover. The SEC's $60 million settlement with Wells Fargo and Merrill Lynch in January 2025 involved sweep rates the firms set themselves.

Who keeps the interest on customer balances: the fintech, the bank or the customer?

The bank collects it first in an FBO account, and the fintech's share comes from the program agreement. The customer earns only what the fintech passes on. In a stablecoin vault the order reverses: the return accrues to the share holder, and the platform takes a disclosed fee.

Can a payment company keep per-merchant segregation while earning yield on float?

Yes, with segregated structures. Banks offer virtual sub-accounts under one FBO or safeguarding account, and onchain a whitelisted or sole-depositor vault can be deployed for each merchant or client. Separate vaults hold smaller pools, which can make instant exits shallower.

Can a fintech earn FBO interest and vault yield at the same time?

Yes, on different balances. Dollars in the FBO account earn the bank's rate under the program agreement. Stablecoins in a vault earn the vault's return. Moving a dollar into a vault means converting it to stablecoins first, which takes it out of the FBO account and out of FDIC pass-through cover.

Can stablecoin issuers pay interest to holders?

Not in the US once the GENIUS Act takes effect, and not under MiCA for e-money tokens in the EU. The US ban covers issuers, and the OCC has proposed treating issuer payments routed through affiliates as covered. Issuers can share reserve income with partner platforms, as Paxos does with USDG.

Keep reading

• How neobanks and fintechs offer stablecoin yield. The three models for an Earn product and what each costs to run.
• Stablecoin regulation by country. Reserve and interest rules in the US, EU, UK and Asia.
• Tokenized money market funds vs stablecoin vaults. Eligibility, redemption speed and fees at the conservative end.
• How neobanks set tiered stablecoin yield rates. Who pays for the spread when rates differ by tier.