HCS Score
Red Line Violations
These are absolute prohibitions in Islamic finance. If any red line is triggered, the asset is automatically classified as HARAM.
Riba Exposure
Not an interest-based lending or borrowing protocol
Gambling / Betting
No gambling or betting mechanism
Haram Industry
Not involved in haram industry
Based on Red Line Screening and HCS Scoring.
Haram / Non Compliant
This cryptocurrency is evaluated as Haram for investment and use because the asset demonstrates material Sharia compliance concerns within the CoinStudy HCS framework.
Explanation
This asset shows significant concerns related to Sharia compliance, financial structure, or speculative design.
Reviewed by
CoinStudy Shariah Board
Ondo Finance has built a specific and clearly articulated product vision — bringing the returns of US Treasury securities to blockchain users globally, particularly those outside the United States who have traditionally had limited access to high-quality dollar-denominated yield.
The mission is genuine. The institutional credibility is real — Ondo has serious backing and serious technology. And USDY does exactly what it claims to do — it provides non-US investors with access to US Treasury yields through a blockchain token.
For Muslim investors, that last sentence contains the entire compliance analysis. US Treasury yields are interest income from US government debt. Delivering that interest income through a blockchain token doesn't transform it into something permissible.
We ran USDY through the full CoinStudy Halal Crypto Standard (HCS) methodology. Here's the complete picture.
USDY fails the CoinStudy HCS Sharia red-line screening. Three red lines are triggered — Riba Exposure, Guaranteed Interest, and Synthetic Interest Products — resulting in an automatic Haram classification with no further scoring.
USDY is the most explicitly yield-bearing token in our stablecoin analysis series. It doesn't merely hold interest-bearing reserves incidentally — it was designed specifically to deliver that interest income to token holders as its primary value proposition.
USDY is a yield-bearing token issued by Ondo Finance that provides non-US investors with stablecoin-like accessibility while delivering high-quality, US dollar-denominated yield.
The token is backed by US Treasury securities and bank deposits. Unlike conventional stablecoins that maintain a fixed $1.00 price, USDY accrues value over time as the interest generated by its Treasury holdings compounds into the token price. This is why USDY currently trades at approximately $1.11 — it has accumulated approximately 11% in Treasury interest income since inception.
The token's name removes all ambiguity — Ondo US Dollar Yield. It's not trying to be a stable dollar. It's trying to deliver Treasury yield to blockchain users. That's the product. That's the compliance concern.
When users purchase USDY, their capital enters the Ondo protocol which holds it in US Treasury securities and bank deposits. As those instruments generate interest income — Treasury bills paying their predetermined rates — that income accrues into the USDY token price.
USDY holders don't receive periodic yield payments like a traditional bond. Instead, the token's value rises continuously as interest accumulates. Buy USDY at $1.00, hold it for a year at 5% Treasury yields, and your USDY is now worth approximately $1.05.
The entire economic model of USDY is designed around this accrual mechanism — making Treasury interest income accessible to blockchain users in a convenient, tokenized format. The innovation is in the delivery mechanism. The economic substance being delivered is government debt interest.
Muslim investors who read our ONDO (Ondo Finance governance token) analysis — which classified it as Haram — will recognize the connection immediately. USDY is a product of the same Ondo Finance that issues the ONDO governance token.
We classified ONDO as Haram because the governance token's value is tied to the growth of a protocol that tokenizes US Treasury securities and generates revenue from interest income. USDY is the actual product whose interest income drives that governance token value.
The ONDO governance token is haram because it benefits from the interest income generated by USDY. USDY itself is haram because it is the interest-bearing product. They are the same compliance concern at different layers of the same protocol.
Some investors ask whether holding USDY is meaningfully different from simply holding US Treasury bills directly — and if Treasury bills are widely used, why would USDY be specifically prohibited?
This misunderstands the Islamic finance framework's approach to these instruments.
The widespread use of Treasury bills doesn't make them permissible under Islamic finance principles. Interest-bearing government debt is Riba regardless of how widely it's used or how important it is to global financial systems. The necessity arguments that justify fiat currency use don't extend to deliberate investment in interest-bearing instruments.
USDY actually makes the compliance concern more explicit and direct than simply noting that Treasury bills exist in the financial system. USDY is a product specifically designed to help investors access and receive Treasury interest income. It's not an incidental connection to interest-bearing assets — it's the deliberate delivery of Riba income as the product's primary value proposition.
The investor who holds USDY has made a conscious decision to receive interest income from US government debt through a blockchain wrapper. That's a different situation from someone who holds a fiat currency that exists within a financial system connected to interest-based banking.
USDY's compliance failure is as direct and explicit as any we've encountered across our entire stablecoin analysis series.
The token's name includes the word "Yield." Its description explicitly states it provides "US dollar-denominated yield." Its price mechanism is designed to rise as Treasury interest accrues. Its entire value proposition is delivering interest income from US government debt to token holders.
There is no ambiguity. No need to trace through reserve structures or explain how interest income indirectly funds operations. USDY delivers Treasury interest directly to holders as the primary product feature.
This is Riba — deliberately designed, explicitly marketed, and efficiently delivered. The blockchain tokenization makes it more accessible and more convenient. It doesn't make it permissible.
USDY's current price of approximately $1.11 reflects accumulated Treasury interest income since the token's inception. The price will continue to rise as Treasury bills in the reserve earn their predetermined rates.
This is guaranteed interest income delivered through token price appreciation rather than periodic payments. The mechanism differs from a conventional bond that pays coupon payments — but the economic substance is identical. You deploy capital, it earns a predetermined government-backed interest rate, and your wealth grows by that rate over time.
The guaranteed nature comes from the US government's backing of its Treasury securities. The interest rate may vary across maturities and market conditions, but the income generation is guaranteed by the full faith and credit of the US government.
Guaranteed interest income from government debt instruments — whether received as bond coupon payments or as USDY price appreciation — is Riba.
USDY is not incidentally a synthetic interest product — it was specifically engineered to be one. The product was created to give non-US investors access to a financial instrument that replicates the economic experience of holding US Treasury securities without the regulatory and logistical barriers that prevent direct access.
A synthetic product that replicates the economic experience of holding interest-bearing government debt is a synthetic interest product. This is the clearest synthetic interest product in our analysis series — more explicit even than GHO or sUSDai.
USDY fails three red lines. Under the CoinStudy HCS framework a single failure results in automatic Haram classification. Three failures makes this result definitive.
Riba Exposure — ❌ Failed. USDY explicitly provides US dollar-denominated yield from Treasury securities and bank deposits. The token is designed to deliver interest income from government debt to holders — the most direct Riba exposure in our stablecoin series.
Guaranteed Interest — ❌ Failed. USDY's value accrues continuously as Treasury bill interest accumulates into the token price. This is guaranteed predetermined percentage-based returns on deposited capital — the definition of guaranteed interest income.
Synthetic Interest Products — ❌ Failed. USDY is explicitly a synthetic fixed-income instrument designed to replicate the economic experience of holding US Treasury securities for non-US investors. It functions as a synthetic interest-bearing product by design.
Gambling and Betting — ✅ Passed.
Haram Industry — ✅ Passed.
Three red lines failed. Layer 2 scoring is skipped entirely.
Overall Result: Haram — Red Line Violations
Muslim investors might compare USDY with Usual's USD0++ — both are yield-bearing stablecoins backed by Treasury securities. The compliance analysis is identical.
USD0 holds Treasury bills and redistributes the yield through USD0++ and USUAL governance tokens. USDY holds Treasury bills and accrues the yield directly into the token price.
Different distribution mechanisms. Same underlying source — US Treasury interest income. Same compliance outcome — Haram.
The blockchain tokenization of Treasury yields, however cleverly structured, leads to the same Islamic finance conclusion because the economic substance being tokenized is always the same — Riba from government debt instruments.
Most stablecoins in our analysis series maintain a $1.00 peg and hold Treasury bills as reserves — generating interest that stays with the issuer. The user holds a stable dollar. The interest goes elsewhere.
USDY intentionally passes that interest to the holder by allowing the token price to appreciate. This makes USDY more transparent about the interest — the holder can see exactly how much Treasury yield they've accumulated in the price.
From a conventional financial perspective, this transparency about yield is positive. From an Islamic finance perspective, the transparency makes the Riba more visible — not less problematic. USDY is haram precisely because it delivers Treasury interest to holders with exceptional clarity and efficiency.
Before investing in any yield-bearing digital asset, ask yourself:
Does this token explicitly aim to deliver government debt interest income to holders? Is the token's value appreciation mechanism directly tied to interest accrual from Treasury securities? Was this product specifically designed to make government debt interest accessible to investors who couldn't access it otherwise? Would you be receiving interest income from US Treasury bills if this product worked as designed? Is there a genuinely halal alternative for the stable value and return profile you're seeking?
For USDY — the honest answers point directly and unambiguously toward the same conclusion.
Ondo US Dollar Yield (USDY) is classified as Haram / Non-Compliant under the CoinStudy Halal Crypto Standard.
Three Sharia red lines are triggered — Riba Exposure, Guaranteed Interest, and Synthetic Interest Products — resulting in automatic Haram classification. USDY is explicitly designed to deliver US Treasury interest income to token holders through a blockchain-based accrual mechanism. Its name, its description, its price mechanism, and its entire value proposition are built around delivering Riba income efficiently and accessibly.
This is the most explicitly yield-bearing token in our analysis series. The convenience and innovation of the delivery mechanism are genuine. The Riba being delivered is equally genuine.
For Muslim investors — USDY represents the clearest example of a blockchain product specifically engineered to deliver interest income. The efficiency with which it accomplishes this goal is precisely what makes it haram.
Disclaimer: This analysis is provided for educational and research purposes only. This analysis is based on guidance from CoinStudy's HCS Shariah Board members. CoinStudy does not issue personal fatwas or financial advice. Please consult a qualified Islamic scholar for individual guidance.
Guaranteed Interest
No guaranteed interest obligations
Synthetic Interest Products
No synthetic interest instruments
3 Red Lines Failed
This asset is automatically classified as HARAM.
