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Compromise Text Prepared in US Senate to Ban Stablecoin Interest

The US Senate has released a compromise text banning stablecoin interest.

Although it received support from the sector, the new law has been expanded to cover all crypto market participants.

Crypto rewards will now be transaction-based instead of "buy and hold," and companies are preparing to update their models.

The most critical development: New limits on yields in the stablecoin law closely affect assets like $USDC.

Two members of the US Senate released a new compromise text regarding stablecoin yield, a significant provision aimed at regulating the digital asset market structure. Announced on Friday, this text aims to resolve one of the biggest points of contention within the Digital Asset Market Openness Act. Hours after the text's release, various trade unions in the crypto sector demanded that the legislative process be expedited.

Restrictions on Stablecoin Yields

With the new text, cryptocurrency companies are prohibited from paying interest or yield on stablecoin balances in a manner similar to banking deposits. This ban is not limited to banks but covers all digital asset market participants. However, the text makes an exception for reward programs based on genuine and transparent transactions. The U.S. Treasury Department and the Commodity Futures Commission have been authorized to prepare detailed rules within one year of the regulation's entry into force.

Summer Mersinger described the new text as "a step in the right direction" for the industry. She particularly highlighted the negative impact of continued legal loopholes on innovative companies and capital.

"Every day goes by without a clear legal framework; it invites talent and capital to leave the country," she stated.

Different reactions from the industry to the bill

While organizations in the crypto ecosystem generally supported the bill, some shared reservations. Ji Hun Kim noted that the new wording introduced a much broader ban than last year's GENIUS Act. While that law only covered stablecoin issuers, the latest proposal expands to include all digital asset market actors.

Ji Hun Kim commented, "As CCl, we do not support the claim that the proliferation of stablecoins will create a flight from bank deposits… The text goes beyond the GENIUS Act."

Kim also urged the committee to move forward with the bill, emphasizing that the US should be a leader in this area.

Dante Disparte, however, gave unconditional support for the compromise. Disparte noted that the USDC stablecoins he issued were rapidly growing in cross-border payments and collateral transactions, stating, "The US must set the direction in digital assets, and today's step is a signal in that direction."

The Need for Restructuring in Crypto Companies

Another key element is the changes companies need to make to their reward programs. According to the new rules, instead of passive earnings based on a "buy-and-hold" model, rewards tied to actual transactions and activities will take center stage. Crypto platforms will need to adapt to this transformation.

Brian Armstrong was one of the most critical players in the bill's discussions. Following the release of the new text, Armstrong expressed his support. Paul Grewal stated that the proposal preserves rewards based on active participation and aligns with the demands of the banking lobby.

Previously, the US Senate Banking Committee postponed the nomination of the Digital Asset Market Openness Act in January. Regulations related to yield appear to be among the most contentious issues so far. While some negotiating points in the bill are still unclear, it is reported that significant obstacles, particularly regarding stablecoin yield, have been overcome.