U.S. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) have introduced a new agreement that prohibits stablecoin issuers from offering yield on stablecoin holdings. This measure aims to clarify the regulatory framework surrounding the cryptocurrency market and is part of ongoing discussions regarding the Clarity Act.
The newly released text, made public on Friday, specifies that stablecoin firms cannot provide interest or yield that resembles traditional bank deposits. According to the legislation, such practices may undermine the role of depository institutions, which are crucial to the stability of the U.S. economy.
The agreement states, “No covered party shall, directly or indirectly, pay any form of interest on yield… solely in connection with the holding of such restricted recipient’s payment stablecoins.” This ban extends to any economic or functional equivalent of interest payments on stablecoin balances.
However, the restrictions do not apply to incentives based on legitimate activities or transactions that differ from traditional yield offerings. The text allows for reward programs akin to those offered by financial institutions for credit card usage, although it does restrict loyalty programs that may compete with bank products.
Senators Tillis and Alsobrooks have been negotiating this legislation for several months. The Senate Banking Committee had previously postponed a markup of the Clarity Act, which addresses various aspects of cryptocurrency regulation. In March, an initial agreement was reached that prohibited yield offerings resembling bank deposit interest while permitting alternative reward structures.
Cody Carbone, CEO of the Digital Chamber, expressed support for the release of the stablecoin yield language, calling it a significant step toward resolving remaining issues before the Committee’s markup. He emphasized the importance of rewards in enhancing consumer utility and fostering competition within the digital asset sector.
In related news, South Korea’s financial watchdog recently imposed a $24.6 million fine on Bithumb, one of the country’s leading cryptocurrency exchanges, while a court has overturned a six-month partial business suspension against the firm.
- A South Korean court has overturned a six-month partial business suspension imposed on Bithumb, while the status of the $24.6 million fine remains unclear.
- Regulators accused Bithumb of approximately 6.65 million violations of anti-money laundering regulations, including failures to verify user identities.
U.S. Senators have proposed legislation banning stablecoin yield offerings that resemble bank deposits, aiming to protect traditional financial institutions. The agreement allows for certain incentive structures while prohibiting yield payments, reflecting ongoing regulatory efforts in the cryptocurrency sector.