Cryptocurrency industry insiders first saw the revised market structure bill in the Senate, and initial impressions were that the language on allowed stablecoin yields was too narrow and unclear, according to a person familiar with the current draft.
New language announced by Senators Angela Alsobrooks and Thom Tillis on Friday would ban payouts for simply holding stablecoins. It would also limit any method of making the program equivalent to a bank deposit in any way and impose further restrictions on other activities that might be allowed, the person said, adding that the mechanism for determining activity-based stablecoin rewards was uncertain.
The cryptocurrency industry got its first look at revised parts of the Digital Asset Market Clarity Act on Monday during a closed-door review on Capitol Hill in Washington, which represents an attempt to clear the way for a Senate Banking Committee hearing. Bankers insist that stablecoin rewards look nothing like interest-bearing bank deposits, as they believe competing products could hold back the industry and stifle lending. Therefore, the compromise would allow for reward programs for users’ stablecoin activity, but not for balances.
The House passed a similar version of the CLARIFICATION Act last year, and another version made it through a markup hearing in the Senate Agriculture Committee. The banking panel represents a big step forward and will allow lawmakers to prepare a final version of the merger and get a vote from the full Senate.
A lobbying battle over stablecoin yields between the crypto industry and the banking industry briefly stymied progress on the legislation. But that’s not the only sticking point. The industry still needs to see a final approach to regulation in the decentralized finance (DeFi) space, which remains an area of concern for Democrats who want to ensure protections for illegal finance. Democrats also insist on the need to ban senior government officials from personally profiting from the crypto industry — a provision that takes direct aim at President Donald Trump.
While last year’s Stablecoin Guidance and Establishing National Innovation in the United States (GENIUS) Act was a huge win for the industry, becoming the first major law in the United States to govern part of the cryptocurrency industry, it was only the less important first step in a one-two policy approach that ended with the Clarification Act.
The full entry of cryptocurrencies into the U.S. financial system will remove regulatory uncertainty for investors hesitant to participate in the industry. Digital asset insiders believe it will open the floodgates for institutional investors and developers who want to exploit the technology.