In a closed-door meeting on Capitol Hill, crypto industry leaders reviewed the latest text of the long-awaited crypto market structure bill, which focused on key proposals to address the stablecoin yield and rewards dispute.
Latest CLARITY Act Draft Says No To Stablecoin YieldOn Monday, the crypto industry got the first look at the latest version of the crypto market structure bill, known as the CLARITY Act, which addresses the main issue that has stalled the legislation over the past two months.
It’s worth noting that the crypto market structure bill has been stalled since the Senate Banking Committee published its draft in mid-January. The text included several divisive policies, including significant restrictions for DeFi and the payment of interest on stablecoins.
The yield dispute became a major sticking point between the banking and crypto industries, leading to a prolonged negotiation period. The banking side has criticized the landmark stablecoin legislation, the GENIUS Act, for loopholes that could allegedly put the financial system at risk and distort market dynamics.
Ahead of the January draft, banks pressed lawmakers to include language in the CLARITY Act that bans yield on stablecoins from crypto exchanges, brokers, and related entities, rather than only issuers.
To address this issue, the Senate Banking Committee proposed that issuers offer rewards for specific actions, such as account openings and cashback, but prohibited interest payments to passive token holders. A month ago, the White House held a meeting to negotiate between the two sides.
Terret’s report shared that the latest proposal would allow rewards based on user activity, including loyalty, promotional, or subscription programs, if they are not considered equivalent to interest from an economic or functional standpoint.
In addition, the latest version of the CLAIRTY Act would require the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Treasury Department to collaborate to define acceptable rewards and establish anti-evasion regulations within a year.
Rewards Compromise Sees Mixed ReactionsThe unnamed source reportedly warned that the “economic equivalence” standard on stablecoin rewards is vague, risking a more restrictive interpretation by future regulators. Furthermore, they highlighted the potential challenges in structuring incentives due to limits on tying rewards to balances or transaction amounts. “Overall, this is a more narrow and restrictive approach toward crypto,” they stated.
“This is the best possible result,” they reportedly affirmed, concluding that the text is “broader than the initial Tillis-Alsobrooks proposal, which would have been more restrictive on crypto.” Bank representatives will now review the draft at a similar meeting on Tuesday.
