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

A newly unveiled section of the proposed Digital Asset Market Clarity Act, released on Friday, reveals that crypto firms will be barred from offering yield on stablecoins based solely on holding reserves. However, the legislation permits rewards for 'bona fide activities or transactions', effectively allowing firms to offer incentives for using their platforms. The compromise, reached by U.S. Senators Thom Tillis and Angela Alsobrooks, aims to strike a balance between the crypto industry and traditional banking institutions. The new text also includes provisions for regulators to define the rules surrounding yield products, potentially giving them latitude in how they interpret the legislation. Crypto companies, such as Coinbase, have expressed satisfaction with the language, stating that it preserves activity-based rewards and does not object to the proposed bill. The development is seen as a significant step forward in the progress of the legislation, with the Senate Banking Committee potentially advancing the bill in the near future.