New Legislation Allows Crypto Firms to Offer Rewards on Stablecoins While Protecting Bank Yields

A newly released agreement has clarified the rules surrounding stablecoin yield, prohibiting its use in a manner similar to bank deposits, but allowing rewards based on genuine transactions and activities. This development is part of the proposed Digital Asset Market Clarity Act, which aims to provide clarity on the regulatory framework for digital assets. The new text, agreed upon by U.S. Senators Thom Tillis and Angela Alsobrooks, restricts stablecoin issuers from offering yield solely based on holding stablecoin reserves, as this may undermine the financial services provided by traditional depository institutions. However, the agreement does permit rewards tied to real participation on crypto platforms and networks, which is seen as a positive development for the industry. The language of the text maintains an approach to rewards similar to those offered by financial firms on credit card activity, but with certain restrictions. The rulemaking provisions in the text give regulators the authority to define how and when crypto firms can offer yield, with considerations including balance, duration, and tenure. This development is expected to advance the legislation, with a Senate Banking Committee hearing potentially on the horizon. Industry leaders, including Coinbase CEO Brian Armstrong and Digital Chamber CEO Cody Carbone, have expressed support for the agreement, seeing it as a step towards resolving key issues and driving innovation in the digital asset ecosystem.