New Legislation Allows Crypto Firms to Offer Stablecoin Rewards While Protecting Bank Yields

A newly introduced agreement regarding the controversial aspect of cryptocurrency market structure legislation proposes to ban stablecoin yield, with certain exceptions. The proposed Digital Asset Market Clarity Act, released on Friday, reveals a compromise between US Senators Thom Tillis and Angela Alsobrooks that would prevent stablecoin issuers from offering yield solely based on holding stablecoin reserves. The agreement emphasizes the importance of depository institutions in the American economy and suggests that stablecoin issuers offering similar services may hinder these institutions. The new text allows for rewards tied to real participation on crypto platforms and networks, which is in line with what the bank lobby had requested. However, it restricts incentives that are functionally equivalent to interest-bearing bank deposits, such as loyalty programs. The legislation requires digital asset firms to restructure their yield offerings, shifting from a 'buy and hold' system to a 'buy and use' approach. The rulemaking provisions in the text grant regulators latitude in defining how crypto companies can offer yield products, considering factors such as balance, duration, and tenure in rewards calculations. The text also includes anti-evasion language, and lawmakers have been negotiating the details for several months. Crypto industry leaders have welcomed the public release of the stablecoin yield language, viewing it as a crucial step towards resolving one of the final issues standing in the way of the Committee's markup.