- Draft bans stablecoin yield and blocks indirect interest-like reward structures across platforms.
- Activity-based rewards allowed if they avoid economic equivalence to interest definitions.
- Industry reactions split as lawmakers push toward an April review timeline on Capitol Hill.
U.S. lawmakers are advancing a draft legislative framework that would restrict how stablecoin issuers and crypto platforms offer rewards, as industry and banking representatives gather to review the proposal. The emerging text, developed through discussions between the White House and key Senate negotiators, outlines a structured approach to limiting yield-bearing features while allowing certain activity-based incentives under defined conditions.
According to details shared by stakeholders who reviewed the draft, the proposal would prohibit digital asset service providers from offering yield on stablecoins, whether directly or indirectly. The restriction would extend to exchanges, brokers, and affiliated entities, aiming to prevent alternative structures that replicate interest-like returns.
The text introduces a broad standard barring any rewards that are “economically or functionally equivalent” to interest. This language is intended to ensure that stablecoins do not operate in a manner similar to traditional bank deposits.
At the same time, the framework permits activity-based rewards tied to user engagement, including loyalty programs, promotions, and subscription models, provided they do not meet the threshold of interest equivalence.
Regulators, including the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the U.S. Treasury, would be tasked with jointly defining permissible reward structures within one year. The agencies would also establish anti-evasion rules to enforce compliance.
Industry Reaction Reflects Diverging Views
Initial responses from industry participants reviewing the draft show a split in interpretation. One stakeholder described the proposal as more restrictive than earlier discussions with the White House, citing concerns over the ambiguity of the “economic equivalence” standard and its potential for stricter enforcement over time.
Another industry participant indicated that the framework aligns with expectations, describing it as a balanced outcome that preserves transaction-based incentives while clarifying that stablecoins cannot function as interest-bearing accounts. The proposal was also described as broader but less restrictive than earlier versions associated with negotiations led by Senators Thom Tillis and Angela Alsobrooks.
Capitol Hill Meetings and Timeline Pressure
Crypto industry representatives met with the Senate Banking Committee on March 23, followed by a separate review session with banking stakeholders scheduled for March 24. The legislative text remains closely held, with limited public disclosure ahead of these discussions.
Lawmakers are reportedly working toward a potential committee markup in April, following the Easter recess. Additional sections of the broader legislation, including provisions related to decentralized finance, token classification, and tokenization, remain under development.
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