New Legislation Prohibits Stablecoin Yield Offerings
- The proposed Digital Asset Market Clarity Act bans stablecoin issuers from offering yield solely for holding stablecoins.
- This agreement was reached by U.S. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) to protect traditional financial institutions.
- Coinbase CEO Brian Armstrong supports the bill, emphasizing the importance of activity-based rewards rather than yield on deposits.
- The new text allows incentives for “bona fide activities” but restricts loyalty programs that resemble interest payments.
- Regulatory rulemaking will be directed by the Treasury Department within a year of the bill’s passage to clarify yield offerings.
The legislation aims to prevent stablecoin issuers from competing with banks by restricting how they can offer rewards based on holding assets. This compromise reflects ongoing negotiations between lawmakers and industry stakeholders, which have included input from bank lobbyists.
With this new framework, digital asset firms must adapt their strategies away from simple holding yields, as outlined in the proposed restrictions on stablecoins. The move is seen as a significant step toward advancing regulatory clarity in the cryptocurrency market.
