New Clarity Act Text Permits Crypto Companies to Offer Stablecoin Rewards While Protecting Bank Yields

A newly introduced section of the proposed Digital Asset Market Clarity Act, released on Friday, outlines a compromise between US Senators Thom Tillis and Angela Alsobrooks, which would prevent stablecoin issuers from offering yield solely based on holding stablecoin reserves. The legislation acknowledges the importance of depository institutions in the American economy and seeks to prevent stablecoin issuers from providing similar services that may hinder these institutions. The agreement paves the way for a potential Senate Banking Committee hearing, which could advance the legislation further. The new text allows for rewards tied to real participation on crypto platforms and networks, but restricts incentives that are economically equivalent to interest-bearing bank deposits. This distinction is expected to require digital asset firms to restructure their yield offerings, shifting from a 'buy and hold' model to a 'buy and use' approach. The legislation also includes provisions for rulemaking, directing the Treasury Department and Commodity Futures Trading Commission to clarify how crypto firms can offer yield within a year of the bill becoming law. The rulemaking provision may provide regulators with flexibility in defining permissible yield products, and considerations such as balance, duration, and tenure may be factored into rewards calculations. The text also includes language aimed at preventing evasion. The release of the stablecoin yield language is seen as a significant step towards resolving outstanding issues and advancing the legislation. Industry leaders, including Coinbase CEO Brian Armstrong and Digital Chamber CEO Cody Carbone, have expressed support for the compromise, citing its potential to drive consumer utility, competition, and innovation in the digital asset ecosystem.