Key Highlights
- The draft proposal would ban platforms from offering stablecoin yield, including indirect mechanisms and anything considered equivalent to interest.
- Activity-based rewards such as loyalty programs, promotions, and subscriptions would remain allowed under defined regulatory conditions.
- The U.S. SEC, CFTC, and U.S. Department of the Treasury will jointly define permissible rewards and anti-evasion rules within one year, as industry reactions remain divided.
New details have emerged about the latest legislative text outlining a compromise on stablecoin yield and rewards under the CLARITY Act, along with early reactions from crypto industry leaders who have reviewed the proposal.
Journalist Eleanor Terrett shared updates on X, citing an internal stakeholder email that lays out the key provisions of the draft. The text comes at a critical time, as crypto and banking representatives are scheduled to meet with lawmakers this week to review the compromise language.
Draft would ban yield on stablecoins, close loopholes
According to Terrett, the proposal would prohibit platforms from offering yield “directly or indirectly” for holding a stablecoin or in a manner that resembles a bank deposit.
The restriction would apply broadly to digital asset service providers, including exchanges, brokers, and their affiliated entities, to close potential workarounds. The language goes further by targeting anything that is “economically or functionally equivalent” to interest, a provision designed to prevent creative structuring around the ban.
The move reflects long-standing concerns from the banking sector, which has argued that yield-bearing stablecoins could function like unregulated deposit accounts and pull funds away from traditional banks.
Activity-based rewards would still be permitted
Despite the strict stance on yield, the draft introduces a carveout for activity-based rewards tied to user behavior.
Platforms would still be allowed to offer incentives such as loyalty programs, promotional campaigns, or subscription-based benefits, provided they are not deemed economically or functionally equivalent to interest.
To bring further clarity, the proposal would direct the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the U.S. Department of the Treasury to jointly define what qualifies as a permissible reward. These agencies would also be tasked with establishing anti-evasion rules within one year of the legislation taking effect.
Industry leaders divided over “economic equivalence” standard
Early reactions from crypto industry figures who reviewed the draft suggest mixed sentiment toward the language.
One industry leader described the text as a “departure” from what had been previously discussed with the White House, warning that the “economic equivalence” standard is vague and could be interpreted more restrictively by future regulators.
They also pointed to limits on tying rewards to balances or transaction amounts, noting that such restrictions could make it difficult for platforms to design workable incentive structures. “Overall, this is a more narrow and restrictive approach toward crypto,” they said.
Others see it as a balanced outcome
Not all the feedback has been critical.
Another industry leader described the text as “largely in line with expectations” and reflective of a balanced compromise. According to this view, the framework preserves transaction-based incentives while clearly drawing a line against stablecoins functioning like interest-bearing deposit accounts.
“This is the best possible result,” they said, adding that the text is broader than the initial Tillis-Alsobrooks proposal, which would have been more restrictive on crypto.
Crypto and bank reps set for key Capitol Hill meetings
The developments come as crypto industry representatives prepare to meet with Republican members of the Senate Banking Committee, with banking sector participants scheduled for discussions the following day. The meetings, also reported by Terrett via Crypto In America, are expected to focus on reviewing the compromise text and gathering feedback from both sides.
The stablecoin yield dispute has been a central obstacle to advancing the CLARITY Act since the Senate Banking Committee postponed its first markup session in January. Senators Thom Tillis and Angela Alsobrooks reached a tentative agreement in principle with the White House on March 20, but the exact legislative language had not been made public until now.
With both crypto firms and traditional financial institutions now set to weigh in, the outcome of this week’s discussions could determine whether the bill advances toward a committee markup in the second half of April, after the Easter recess.
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