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

A newly proposed section of the Digital Asset Market Clarity Act, released on Friday, reveals that stablecoin yield will be prohibited unless it is based on actual transactions or activities. This approach is similar to previous discussions on the legislation. The compromise, reached by U.S. Senators Thom Tillis and Angela Alsobrooks, aims to prevent stablecoin issuers from offering yield solely based on holding stablecoin reserves, as this may undermine the services provided by traditional 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, it restricts loyalty programs and requires digital asset firms to restructure their yield offerings to meet specific transaction-based caveats. The rulemaking provisions in the text grant regulators latitude in defining how crypto companies can offer yield products, considering factors such as balance, duration, and tenure. The text also includes anti-evasion language to prevent crypto firms from circumventing the regulations. The release of this text is a significant step forward in the legislation's progress, with the Senate Banking Committee hearing potentially advancing the bill further. Crypto industry executives, such as Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal, have expressed satisfaction with the language, stating that it preserves activity-based rewards and should not be a basis for objection. The Digital Chamber CEO, Cody Carbone, also welcomed the public release of the stablecoin yield language, seeing it as an important step toward resolving the final issues and advocating for the power of rewards to drive consumer utility, competition, and innovation in the digital asset ecosystem.