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

A newly introduced provision in the proposed Digital Asset Market Clarity Act, released on Friday, outlines that stablecoin yield will be prohibited under certain conditions. The compromise, reached by U.S. Senators Thom Tillis and Angela Alsobrooks, bans stablecoin issuers from offering yield solely based on holding stablecoin reserves, as this may hinder the services provided by depository institutions. However, the new text does allow for incentives tied to genuine activities or transactions on crypto platforms and networks. This approach is similar to rewards offered by financial firms for credit card activity. The legislation is expected to move forward, with a Senate Banking Committee hearing potentially advancing the bill. Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal have expressed satisfaction with the language, stating it preserves activity-based rewards. The text also includes provisions for rulemaking, directing the Treasury Department and Commodity Futures Trading Commission to establish clearer guidelines for crypto firms offering yield within a year of the bill becoming law. This may provide regulators with flexibility in defining what crypto companies can do with yield products, considering factors such as balance, duration, and tenure in rewards calculations.