New Legislation Allows Crypto Firms to Offer Rewards on Stablecoins While Protecting Bank Interests

A newly unveiled agreement addresses the contentious issue of stablecoin yield in the crypto market, proposing an approach similar to previous discussions. The compromise, reached by US Senators Thom Tillis and Angela Alsobrooks, would prohibit stablecoin issuers from offering yield solely based on holding stablecoin reserves, as this may undermine the financial services provided by depository institutions. However, the agreement allows for rewards tied to real participation on crypto platforms and networks, which is comparable to incentives offered by financial firms for credit card activity. The text includes provisions for rulemaking, giving regulators flexibility in defining how crypto companies can offer yield products, and includes anti-evasion language to prevent circumvention of the rules. The development is seen as a step forward in advancing the legislation, with trade associations and industry leaders welcoming the progress and advocating for the potential of rewards to drive innovation and consumer utility in the digital asset ecosystem.