New Clarity Act Text Allows Crypto Firms to Offer Stablecoin Rewards While Protecting Bank Yields

A newly released agreement on the Digital Asset Market Clarity Act has clarified the rules for stablecoin yield products, banning issuers from offering rewards solely for holding stablecoin reserves. The new text, released 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 agreement, stablecoin issuers are not allowed to pay interest on yield to restricted recipients solely for holding payment stablecoins or in a manner equivalent to interest-bearing bank deposits. However, incentives based on genuine activities or transactions are permitted, similar to rewards offered by financial firms for credit card activity. The restriction applies to loyalty programs and similar efforts. The text also includes provisions for rulemaking, directing the Treasury Department and Commodity Futures Trading Commission to launch a rulemaking process within a year of the bill becoming law to provide clearer guidelines on crypto firms' yield products. This development is seen as a significant step forward in the legislation's progress, with crypto executives and trade associations welcoming the public release of the stablecoin yield language. Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal have expressed satisfaction with the language, which they believe preserves activity-based rewards tied to real participation on crypto platforms and networks.