U.S. Senate's New Move: What Are Stablecoins and Why Are Regulators Limiting Their Earnings?

Stablecoins, as a crucial infrastructure in the cryptocurrency market, have recently become a focal point in the U.S. Congress. According to a bipartisan draft released by Senate Banking Committee Chairman Tim Scott, this regulatory and industry showdown has officially entered a new phase. The new bill sets clear red lines regarding the profit models of stablecoins, which will profoundly impact the business operations of cryptocurrency exchanges.

The Battle Over Stablecoin Profits: Why Are Banks and Platforms Opposed?

To understand this policy controversy, first, it’s essential to clarify what stablecoins are. In simple terms, stablecoins are cryptocurrencies pegged to the US dollar or other fiat currencies, designed to reduce volatility risk. Unlike Bitcoin or Ethereum, which experience dramatic price swings, stablecoins maintain a fixed value, serving as settlement tools and stores of value in crypto trading.

However, the issue arises as many crypto exchanges (such as Coinbase) begin offering interest or rewards to users holding stablecoins, triggering strong pushback from traditional financial sectors. Bankers point out that the GENIUS Act passed in 2025, while prohibiting stablecoin issuers from paying direct interest, leaves regulatory loopholes that fail to prevent platforms from offering rewards to users. In contrast, crypto companies argue that this issue was already addressed during bill negotiations and accuse banks of attempting to stifle competition through excessive regulation.

Core Provisions of the New Bill: Only Certain Activities Can Generate Profits

The latest Senate draft seeks a balance between strict regulation and industry flexibility. According to a compromise proposal by Democratic Senator Angela Alsobrooks, the bill explicitly states that digital asset service providers cannot pay any form of interest or yield to users who merely hold payment-type stablecoins.

In other words, if stablecoins are simply held passively in an account without any activity, users cannot profit from them. However, the bill does not completely ban all profit-generating methods. Rewards or yields directly linked to specific activities (such as trading, staking, providing liquidity, or using stablecoins as collateral) are still permitted. This design reflects lawmakers’ considerations: to prevent stablecoins from becoming purely interest-generating tools while maintaining operational flexibility for the crypto industry.

Software Developers and Ethical Controversies: How Does the Bill Balance Interests?

The new draft also incorporates proposals from Senators Cynthia Lummis and Ron Wyden, particularly exempting software developers and infrastructure providers (such as miners or node operators) from compliance obligations. This clause aims to protect the open-source community, ensuring developers are not classified as “financial intermediaries” solely for writing code.

However, the bill lacks specific “ethics clauses” addressing conflicts of interest. According to Bloomberg estimates, the Trump family has profited approximately $620 million through projects like World Liberty Financial. Some Democratic lawmakers lobbied strongly to include restrictions on such interests, but moderate party members like Ruben Gallego warned that overly aggressive ethics provisions could cause the entire bill to stall. Ultimately, lawmakers chose to set aside this controversy to advance the overall legislation.

Next Steps: Senate-House Coordination and Final Signing

This amendment is seen as a significant step toward advancing legislation, paving the way for the Senate Banking Committee’s upcoming formal review. Meanwhile, the Senate Agriculture Committee has postponed related hearings, citing the need for more time to consolidate opinions. The versions from both committees must eventually be reconciled before being sent to a full Senate vote.

Subsequently, lawmakers will also need to address the House version of the Digital Asset Market Clarity Act, which passed the House last summer. The final bill must be approved by both chambers before being sent to President Donald Trump for signature. The battle over stablecoin regulation is far from over, and its ultimate outcome will profoundly influence the future landscape of the global cryptocurrency market.