We've all seen this script play out before.When Treasury yields rise, investors can earn a decent return by holding something considerably less exciting than Bitcoin. Because that is when liquidity gets tighter, the opportunity cost of owning non-yielding assets goes up, and speculative trades tend to suffer as a result.But is that a too simplistic approach in seeing how the crypto market responds to higher interest rates? Perhaps.While higher rates may be bad for Bitcoin as an individual asset, they can actually be beneficial to parts of the crypto financial system instead.Stablecoins have turned higher rates into a business modelTether is probably the clearest example in this space.USDT is backed heavily by short-term US government securities and other liquid assets. So when Treasury bills are yielding around 4% these days, the reserves sitting behind those stablecoins aren't just sitting there. They're producing income. And we're talking about chump change here. We're talking serious money.In Q2, Tether reported roughly $1.5 billion in net operating profit. That was led by income from US Treasuries and repo, with around $184.6 billion of USDT outstanding at the end of June.And we're also seeing Circle play a similar game with USDC. In Q2, it reported $701 million in revenue and reserve income as USDC circulation reached $73.3 billion.In essence, the same high interest rates that make life uncomfortable for Bitcoin can actually make the economics behind some of crypto's biggest businesses considerably more attractive.And that is before considering where the money itself is going.Crypto investors are bringing Treasury yields on-chainMuch like the concept of tokenised gold, this is the copy-and-paste but just for a Treasury bill or money market fund. In essence, investors can own a token representing exposure to those assets on a blockchain.And this is a space that has grown quite rapidly over the years. In 2023, the tokenised Treasury market is roughly worth $300 million. By the end of 2025, it has grown to just over $9 billion. And by August this year, it has turned into $15 billion.What does this tell us?It is perhaps an indication that higher rates aren't necessarily pushing every dollar out of crypto anymore. Instead, some of that money is simply moving into a different part of crypto.And instead of choosing between "on-chain" and "yield", investors increasingly get to have both in this current and growing landscape.That changes the old crypto liquidity storyOf course, this still doesn't mean that Bitcoin and crypto investors suddenly wants the Fed to raise rates.If yields keep climbing, the dollar strengthens, and financial conditions tighten, I would still expect Bitcoin and other risk-sensitive tokens to feel the heat.That basic macro relationship hasn't disappeared.But essentially what we're talking about here is that the landscape of crypto has changed.Five years ago, a world of higher interest rates mostly meant competition from cash and bonds. Today, stablecoin issuers can earn billions from those yields and tokenised Treasury products can bring those yields directly onto blockchains.And that changes the story of how money flows in this space.Does it mean that higher rates good for crypto prices? Probably not.But are they necessarily bad for the crypto industry? Not entirely.And in this market outlook where interest rates and bond yields may remain higher for longer, the biggest winner in crypto might not be the token offering the highest potential return. It might very well just be the infrastructure that finds a way to put that 5% Treasury yield on-chain. This article was written by Justin Low at investinglive.com.