U.S. Senators Thom Tillis and Angela Alsobrooks have reached a new agreement on a draft bill that would ban yield payments derived from stablecoins, marking a significant development for the cryptocurrency sector. This jointly agreed text specifically prohibits stablecoins from offering direct or indirect interest and seeks to provide a clear legal framework for one of the industry’s most debated issues, following months of regulatory discussion.
Ban on stablecoin-based returns
According to the shared draft bill, companies issuing stablecoins would be prohibited from offering customers any form of yield or reward simply for holding these digital assets. The rationale is that deposit-taking banks play a crucial role in the financial system, and allowing stablecoin providers to offer similar services could undermine these traditional institutions. In effect, this regulation aims to prevent payments or methods similar to bank deposit interest from stablecoin holdings.
The bill makes it clear that no organization may grant cash, tokens, or other rewards merely for the act of holding a stablecoin, emphasizing the potential of such transactions to mirror the economic impact of bank deposits.
The draft states: “No covered entity may, directly or indirectly, pay any yield, reward, or interest in connection with held payment stablecoins. Similarly, methods resulting in the same economic outcome as interest-bearing accounts should not be used.”
Restrictions on loyalty and reward programs
Another notable detail in the new proposal is that its reach extends beyond bank deposit-like yields to also restrict rewards or loyalty programs. While incentives tied to genuine commercial activity will be exempt, loyalty points or programs solely based on holding stablecoins will also fall under the ban. This aims to prevent competition with core banking products via such schemes.
The bill distinguishes between widespread credit card reward systems and unstable yield schemes linked to stablecoins, clarifying that its focus rests only on the latter.
Senate process and industry reactions
The drafting process accelerated after the Senate Banking Committee postponed a planned general Clarity Act review in January. By March, a compromise allowing structured rewards in compliance with banking rules became public, setting the groundwork for this new move.
This fresh proposal not only prohibits stablecoin issuers from providing interest-like rewards but also prioritizes the overall financial stability of the banking system. Meanwhile, industry representatives argue that while some incentives might be restricted, innovative programs that don’t compete with core banking services should still be supported.
Cody Carbone, CEO of the Digital Chamber and an active figure in the crypto industry, welcomed the public release of the stablecoin yield regulation draft. He noted that “an important step has been taken toward resolving the last contentious issues with the Committee. As the process continues, we will keep supporting reward mechanisms that empower consumers and foster innovation and competition in the digital asset ecosystem.”
Although the details of the draft bill have yet to be formally enacted into law, both the crypto sector and traditional financial institutions anticipate it could have serious ramifications. The legislative process, spearheaded by Senators Tillis and Alsobrooks, will conclude with the Senate committee’s final decision following further deliberations.
