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

The newly unveiled section of the proposed Digital Asset Market Clarity Act, released on Friday, reveals that a compromise has been reached between U.S. Senators Thom Tillis and Angela Alsobrooks. This agreement would restrict stablecoin issuers from offering yield solely based on holding stablecoin reserves, as it may hinder the financial services provided by depository institutions. The new text allows for rewards tied to real participation on crypto platforms and networks, similar to those offered by financial firms for credit card activity. However, this restriction does not apply to incentives based on genuine activities or transactions that differ from yield generated by interest-bearing bank deposits. The legislation requires digital asset firms to restructure their yield offerings, shifting from a 'buy and hold' system to a 'buy and use' approach to meet the transaction requirements. The rulemaking provisions in the text grant regulators the authority to define how and when crypto firms can offer yield, considering factors such as balance, duration, and tenure in rewards calculation.