New Clarity Act Text Allows Crypto Firms to Offer Stablecoin Rewards with Certain Restrictions

The newly proposed Digital Asset Market Clarity Act text, released on Friday, prohibits stablecoin issuers from offering yield solely based on holding stablecoin reserves. This move is seen as a compromise between U.S. Senators and crypto firms, and is aimed at preventing stablecoin issuers from competing with traditional banks. The new text allows for rewards tied to real participation on crypto platforms and networks, which is similar to rewards offered by financial firms on credit card activity. However, it restricts loyalty programs and other similar efforts. The rulemaking provisions in the text direct the Treasury Department and Commodity Futures Trading Commission to launch a rulemaking within a year of the bill becoming law, which will provide clearer guidelines on how crypto firms can offer yield. This development is expected to advance the legislation in the Senate, although there are still other negotiation points that need to be resolved. Crypto firms may need to restructure their yield offerings to comply with the new regulations, moving from a 'buy and hold' system to a 'buy and use' approach. The Consumer Federation of America has noted that the wording of the rulemaking provision could give regulators flexibility in defining what crypto companies can do with yield products.