New Legislation 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, outlines a compromise that would ban stablecoin issuers from offering yield based solely on holding stablecoin reserves. This approach is similar to previous discussions and aims to prevent stablecoin issuers from competing with traditional banks. The new text allows for rewards tied to real participation on crypto platforms and networks, while prohibiting loyalty programs and similar efforts. Crypto firms may need to restructure their yield offerings to meet the new requirements, which are subject to further rulemaking by the Treasury Department and Commodity Futures Trading Commission. The legislation aims to strike a balance between regulating the crypto market and allowing for innovation and competition. The release of the text is seen as a significant step forward in the legislative process, with many industry stakeholders welcoming the clarity and progress towards a markup hearing.