Draft U.S. legislation aimed at setting rules for digital assets would bar stablecoin issuers and intermediaries from offering yield on user balances, according to the latest text of the proposed Crypto Clarity Act reviewed by industry participants.
The revised language, negotiated by lawmakers in recent days, prohibits so-called ‘passive‘ rewards tied to simply holding stablecoins while leaving room for certain activity-based incentives linked to transactions or platform usage, though details remain unclear, according to reports.
The activities-based mechanics of determining stablecoin rewards have reportedly been left uncertain.
The provision reflects a compromise in a long-running debate between crypto firms and traditional banks, which have argued that yield-bearing stablecoins could draw deposits away from the banking system.
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Banks have argued that stablecoin rewards could limit the industry and lending since they are not similar to interest-bearing bank deposits hence the proposal to base yield on activities over balances.
The Clarity Act, a broader market structure bill for digital assets, has been stalled in the Senate for months with disagreements over stablecoin yield among the key sticking points.
Initial industry reactions suggest the latest draft would significantly limit a key revenue stream for crypto platforms that have used stablecoin rewards to attract users even as lawmakers attempt to distinguish such programs from interest-bearing bank deposits.
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