A newly released draft of the Digital Asset Market Clarity Act narrows how stablecoin issuers can offer rewards — banning interest-like yield that simply pays holders for holding stablecoin balances while preserving activity-based incentives tied to real crypto use.
What the draft says
- The compromise text negotiated by Senators Thom Tillis (R‑N.C.) and Angela Alsobrooks (D‑Md.) would bar “covered parties” from paying any form of interest or yield to a “restricted recipient” solely for holding payment stablecoins, or in a way that is “economically or functionally equivalent” to interest on bank deposits.
- The ban explicitly aims to protect depository institutions, arguing that banks provide core financial services and that stablecoin products that mirror deposit interest could undermine those institutions.
- The restriction does not apply to incentives “based on bona fide activities or bona fide transactions” — for example, rewards tied to platform participation or transaction activity rather than passive balances. Loyalty programs and similar cash‑back schemes are treated differently and can fall under the restriction.
- The text contains anti‑evasion language and directs Treasury and the Commodity Futures Trading Commission to complete rulemaking within one year of enactment to define how these rules apply in practice — including factors such as balance, duration, tenure, activity definitions and whether incentives count as payments of yield.
Industry reaction and likely effects
- Coinbase — a central party in negotiations and among the firms most affected if broad yield bans were imposed — welcomed the language. CEO Brian Armstrong urged a committee markup on social media, and Coinbase’s chief legal officer Paul Grewal said the draft “preserves activity‑based rewards tied to real participation on crypto platforms and networks,” adding that the company is focused on getting a bill done and does not see this language as an obstacle.
- The Digital Chamber called the published text “an important step” toward resolving a major outstanding issue and said it supports rewards that drive consumer utility and competition.
- Crypto firms will likely need to redesign programs that currently pay passive “buy and hold” returns. Several industry insiders describe a shift toward “buy and use” models — rewarding transactions, staking, governance participation or other verifiable activity rather than simply balance holdings. The exact contours will depend heavily on the upcoming rulemaking, which could allow regulators discretion over how activity and reward calculations are defined and applied.
Legislative context and next steps
- Senators Alsobrooks and Tillis have been negotiating stablecoin yield language since a planned Senate Banking Committee markup of the broader Clarity Act was delayed in January. Releasing this language clears a major sticking point and increases the likelihood of a committee markup, though other negotiation items remain unresolved.
- If the bill advances, Treasury and the CFTC would have one year after enactment to issue rules clarifying permissible designs for crypto rewards — a process that will determine how easily firms can adapt existing products or innovate within the new guardrails.
Bottom line
The draft balances two aims: preventing stablecoin programs that resemble bank deposit interest while allowing crypto platforms to reward genuine on‑platform activity. The policy shifts the focus from passive yield to verifiable participation, but the real-world impact will hinge on regulatory rulemaking and the final legislative language enacted by Congress.
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