A new draft bill under discussion in the US Congress would require financial regulators to collaboratively establish detailed rules governing reward schemes in the stablecoin market. The latest version of the bill lays out a mandate for the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Department of the Treasury to define within one year the authorized scope for stablecoin rewards, as well as to set standards closing any regulatory loopholes. Recent activity on Capitol Hill suggests that the bill’s main focus has centered squarely on these provisions, reflecting broader debates about incentives in the crypto sector.
Defining Yield and Incentive Boundaries
At the heart of the proposed legislation is a debate over whether holders of stablecoins should be entitled to receive interest-like returns on their balances. The framework being considered draws a hard line against direct yield on held balances, while leaving room for certain incentive models linked to specific transactions or usage activities. Lawmakers thus appear determined to ensure that stablecoins do not morph into bank deposit alternatives, even as they stop short of excluding all possible forms of crypto-based incentives.
The bill introduces an “economic equivalence” standard—one of its most contentious aspects. The lack of a clear definition has raised concerns that regulators may later interpret this provision more strictly, potentially complicating the design of products that offer rewards based on account size or transaction volume.
By codifying the longstanding debate over “rewards versus deposit-like yield,” the bill brings to the fore an issue that has preoccupied the stablecoin market for years. In recent months, whether stablecoin incentives could become competitors to the traditional banking system has become a central concern in Washington. Discussions held in March revealed that compromise on this issue is critical to advancing the wider package of crypto legislation.
Ongoing Efforts to Achieve Consensus
The draft’s overall approach attempts to balance the banking sector’s concerns with the expectations of the digital asset industry. While aiming to limit stablecoins from functioning as traditional deposits, the text does not categorically rule out certain incentive models for payments or on-chain uses. Thus, the bill signals a preference for controlled boundaries over outright prohibition, striving for a regulatory line that neither stifles innovation nor exposes consumers or banks to unnecessary risks.
Eleanor Terrett, a keen observer of US digital asset regulation, has recently provided insights from congressional circles. Terrett has highlighted that the reward mechanisms section of the bill uniquely demands regulators from multiple agencies to jointly craft the applicable rules.
Nevertheless, the process remains unfinished. Further scrutiny and feedback are expected from the banking sector, which could lead to additional modifications during legislative proceedings. Recent review sessions on Capitol Hill have indicated that the draft is not yet finalized, and there is widespread anticipation that stablecoin rewards will continue to dominate Washington’s crypto regulatory agenda in the coming days.
