New Legislation Allows Crypto Companies to Offer Rewards on Stablecoins Under Certain Conditions

A newly unveiled section of the proposed Digital Asset Market Clarity Act text, released on Friday, outlines that stablecoin issuers will be prohibited from offering yield solely based on holding stablecoin reserves. However, the legislation does allow for rewards tied to actual participation and use of crypto platforms and networks. This development comes after months of negotiations between U.S. Senators Thom Tillis and Angela Alsobrooks, and is seen as a key step forward in the progress of the legislation through the Senate. According to the text, no covered party can pay interest on yield to a restricted recipient simply for holding payment stablecoins, or in a manner equivalent to interest-bearing bank deposits. Nonetheless, incentives based on genuine activities or transactions are permitted, similar to rewards offered by financial firms for credit card activity. The legislation also includes provisions for rulemaking, which will be overseen by the Treasury Department and the Commodity Futures Trading Commission, and is expected to provide further clarity on how crypto firms can offer yield products. Industry leaders, including Coinbase CEO Brian Armstrong and Digital Chamber CEO Cody Carbone, have expressed support for the legislation, citing its potential to drive innovation and competition in the digital asset ecosystem.