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

A newly unveiled agreement addresses the contentious issue of stablecoin yields in the crypto market, introducing a provision that prohibits stablecoin issuers from offering yields solely based on holding stablecoin reserves. This move aims to safeguard the interests of traditional banking institutions, which provide essential financial services to the US economy. The proposed Digital Asset Market Clarity Act text, released on Friday, reveals a compromise between US Senators Thom Tillis and Angela Alsobrooks, which would ban stablecoin issuers from offering yield-based services that mimic those of depository institutions. However, the legislation allows for rewards tied to genuine participation on crypto platforms and networks, akin to incentives offered by financial firms for credit card activity. The restriction does not apply to incentives based on bona fide activities or transactions that differ from yield generated by interest-bearing bank deposits. 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 products within a year of the bill becoming law. This development is expected to pave the way for a Senate Banking Committee hearing, marking a significant step forward in the legislation's progress through the Senate.