Senate Draft Bill Prohibits Stablecoin Interest Payments
- The updated crypto market structure bill draft bans digital asset providers from paying interest solely for holding stablecoins.
- The banking industry lobbied for this provision, citing a Treasury report warning of potential deposit flight from traditional banks.
- Three Democratic Senators requested a public hearing before the markup, noting members have less than 48 hours to review the text.
- Activity-based rewards remain exempt from the prohibition, including transaction-related incentives and ecosystem participation rewards like staking.
- The bill mandates that the SEC and CFTC establish disclosure rules within one year to clarify compensation offered by digital asset intermediaries.
The Senate’s draft legislation seeks to curb passive yield offerings on stablecoins, aligning with traditional banking interests concerned about deposit outflows. Despite this restriction, activity-based rewards are preserved, allowing some flexibility for digital asset service providers.
This legislative move highlights ongoing tensions between traditional financial institutions and the evolving cryptocurrency market over regulatory clarity and competitive dynamics in financial services. (Source)
