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

The proposed Digital Asset Market Clarity Act text, released on Friday, introduces a new approach to stablecoin yield, effectively banning issuers from offering yield solely based on holding stablecoin reserves. This move aims to prevent stablecoin issuers from providing services that could undermine the role of traditional depository institutions in the American economy. The compromise, negotiated by U.S. Senators Thom Tillis and Angela Alsobrooks, allows for rewards tied to real participation on crypto platforms and networks, while restricting incentives that are economically or functionally equivalent to interest-bearing bank deposits. The text also includes provisions for rulemaking, directing the Treasury Department and Commodity Futures Trading Commission to establish clearer guidelines for crypto firms offering yield within a year of the bill becoming law. This development is seen as a significant step forward in the legislation's progress, with Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal expressing satisfaction with the language, which they believe preserves activity-based rewards and does not pose a basis for objection. The new text 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, and may provide regulators with latitude in defining what crypto companies can do with yield products.