New Clarity Act Text Allows Crypto Firms to Offer Rewards for Stablecoin Transactions

A recent agreement has been reached regarding the contentious issue of stablecoin yield in the crypto market, with the newly released Digital Asset Market Clarity Act text revealing that stablecoin issuers will be banned from offering yield solely based on holding stablecoin reserves. This move is seen as a compromise between U.S. Senators and crypto firms, with the aim of advancing the legislation. The new text allows for rewards tied to real participation on crypto platforms and networks, while prohibiting incentives that are economically or functionally equivalent to interest-bearing bank deposits. This development is expected to require digital asset firms to restructure their yield offerings, shifting from a 'buy and hold' system to a 'buy and use' approach. The rulemaking provisions in the text will provide further clarity on how crypto firms can offer yield, with regulators having latitude in defining what constitutes a bona fide transaction. The text also includes anti-evasion language, and industry leaders have welcomed the public release of the stablecoin yield language as a step towards resolving one of the final issues standing in the way of the Committee's markup.