New Legislation Allows Crypto Firms to Offer Stablecoin Rewards with Certain Conditions

A newly introduced agreement has clarified the regulations surrounding stablecoin yield in the crypto market, prohibiting issuers from offering yield solely based on holding stablecoin reserves. However, the legislation does allow for rewards tied to real participation on crypto platforms and networks, which is a key aspect of the bill. The compromise, reached by U.S. Senators Thom Tillis and Angela Alsobrooks, aims to strike a balance between the interests of crypto firms and traditional banks. According to the proposed text of the Digital Asset Market Clarity Act, stablecoin issuers are barred from paying interest on yield to restricted recipients solely for holding payment stablecoins or in a manner equivalent to interest-bearing bank deposits. Nevertheless, incentives based on bona fide activities or transactions are permitted, providing an opportunity for crypto firms to restructure their yield offerings. The legislation also includes provisions for rulemaking, which will be overseen by the Treasury Department and the Commodity Futures Trading Commission, and is expected to provide further clarity on the regulations surrounding crypto yield products. The development is seen as a significant step forward in the progress of the legislation, with many industry stakeholders welcoming the release of the stablecoin yield language. Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal have expressed satisfaction with the language, stating that it preserves activity-based rewards tied to real participation on crypto platforms and networks. The Digital Chamber CEO Cody Carbone also welcomed the public release of the stablecoin yield language, seeing it as an important step toward resolving one of the final issues standing between the Committee and a markup.