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

A newly released section of the proposed Digital Asset Market Clarity Act reveals that stablecoin issuers will be restricted from offering yield based solely on holding stablecoin reserves, but can provide incentives for activities such as using their platforms and networks. The new text aims to strike a balance between the interests of traditional banks and the growing crypto industry, and is seen as a crucial step towards advancing the legislation. The compromise, reached by U.S. Senators Thom Tillis and Angela Alsobrooks, would allow crypto firms to offer rewards for 'bona fide activities or bona fide transactions', while prohibiting yield that is economically or functionally equivalent to interest-bearing bank deposits. This approach is similar to the rewards programs offered by financial firms for credit card activity. The text also includes provisions for rulemaking, which would give regulators the authority to define how crypto firms can offer yield products, and includes anti-evasion language to prevent companies from circumventing the rules. The development is seen as a positive step by the crypto industry, with companies such as Coinbase welcoming the clarity provided by the new text. However, the exact implications of the rules are still unclear, and will depend on the outcome of the rulemaking process.