Quick Takeaways
- Stablecoin rewards tied to usage would remain legal under the draft.
- The bill blocks interest payments for simply holding stablecoins.
- Lawmakers signal compromise amid pressure from banks and crypto firms.
US lawmakers are signaling a softer stance on stablecoin incentives. A revised draft of the Digital Asset Market Clarity Act backs rewards linked to usage. The proposal clarifies that incentives would not turn stablecoins into securities. It also avoids classifying them as bank-like deposits.
The update offers relief to crypto firms. Many feared that reward programs could trigger stricter regulation. Instead, the draft draws a clear distinction. Usage-based perks are allowed, passive yield is not.
Lawmakers Aim for Predictable Stablecoin Rules
The updated text was released by Senate Banking Committee Chair Tim Scott. He said the goal is regulatory clarity with consumer protection.
Lawmakers want consistent rules for digital assets. They also want to avoid stifling innovation.
Stablecoins sit at the center of the debate. They bridge crypto markets and traditional payments.
The bill reflects months of negotiation. It attempts to balance financial stability and growth.
What the Draft Allows and Where It Draws the Line
The proposal largely supports the crypto industry’s view. Rewards tied to normal financial activity are explicitly allowed.
These include payments, transfers, remittances, and settlements. Wallet usage and platform activity also qualify.
Promotions like rebates and subscription perks are permitted. So are campaigns designed to boost adoption.
Crypto-native activities receive similar treatment. Liquidity provision, governance participation, and validation rewards remain legal.
However, the bill draws a firm boundary. Service providers cannot earn interest for simply holding stablecoins.
This ban applies regardless of payment form. Cash, tokens, or other compensation all count.
Banks Warn of Deposit-Like Risks
Traditional banks continue to push back. They argue stablecoin rewards resemble deposit interest.
Community banking groups warn of regulatory arbitrage. They claim crypto firms bypass supervision.
According to banking advocates, yield-style incentives could drain deposits. That shift could reduce local lending capacity.
Small businesses and households could feel the impact. Banks say credit availability would suffer.
These concerns have shaped the legislative debate. Lawmakers remain cautious about systemic risk.
Crypto Industry Pushes Back Hard
Crypto groups strongly dispute banking claims. They argue stablecoin rewards mirror fintech incentives.
Programs resemble cashback or loyalty points. They are not savings accounts, firms say.
The Crypto Council for Innovation has defended reward models. So has the Blockchain Association.
They told lawmakers stablecoins do not fund loans. Users typically spend or transfer them.
The groups warn that strict limits would hurt consumers. Innovation and choice could decline.
They also argue rewards drive adoption. Usage incentives help stablecoins compete with legacy payments.
Market Structure Progress Remains Slow
Despite movement on stablecoins, broader reform lags. The Senate Agriculture Committee delayed its markup.
Chair John Boozman cited the need for consensus. Bipartisan agreement remains elusive.
Market structure legislation covers more than stablecoins. It defines oversight for crypto trading and custody.
Still, the revised draft signals direction. Lawmakers appear open to compromise.
Rather than banning incentives, they seek boundaries. That approach may ease near-term uncertainty.
A Cautious Green Light for Stablecoin Rewards
The updated bill sends a clear message. Usage-based stablecoin rewards can continue.
At the same time, lawmakers draw limits. Passive yield remains off-limits.
This compromise reflects political reality. Both sides gain partial wins.
Banks get guardrails against deposit substitutes. Crypto firms retain room to innovate.
As Congress debates the final language, the signal is clear. Incentive-driven stablecoins can coexist with traditional finance.
For now, stablecoin rewards appear safe. The regulatory door remains open, but it is closely monitored.