Within hours of U.S. Sens. Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) releasing a compromise text on stablecoin yields in the Digital Asset Market Clarity Act on Friday, the last major sticking point in the bill, cryptocurrency trade groups called for a markup on key market structure legislation.
The text prohibits cryptocurrency companies from paying interest or earnings on stablecoin balances in a manner that is economically or functionally equivalent to a bank deposit.
It establishes an incentive program related to “bona fide activities or bona fide transactions” and directs the Treasury Department and the Commodity Futures Trading Commission to develop rules within one year of enactment.
Blockchain Association CEO Summer Mersinger called the deal a step in the right direction.
“We commend Senators Tillis and Also Brooks for their leadership in reaching this agreement,” Messinger said. “Without a clear legal framework, top talent, capital and innovative companies are invited to go elsewhere every day.”
The Cryptocurrency Innovation Council supported the bill while also expressing concerns. Its CEO Ji Hun Kim said the new language takes the prohibition framework well beyond last year’s GENIUS bill, which only prohibited issuers from paying incentives.
“CCI has made it clear that we disagree with the assertion that stablecoin adoption is causing deposit flight issues,” Kim wrote on
King urged the committee to move forward with the bill regardless. “The North Star is ensuring America can lead in cryptocurrency – this is the future. We respectfully ask the Senate to take action. The time is now,” he wrote.
Circle chief strategy officer Dante Disparte, whose company issues USDC and EURC stablecoins, unconditionally supported the deal.
“Today’s compromise on stablecoin yields marks meaningful progress in Clarification Act negotiations,” Dispart said, pointing to USDC’s growth in cross-border payments, capital markets collateral, and agency commerce.
“The United States faces a clear choice when it comes to digital assets: lead or be led,” he said. “Today’s progress is an encouraging sign that the United States has chosen to lead.”
Coinbase has the biggest stake in the negotiations. CEO Brian Armstrong tweeted “Flag it” after the text message was released. Chief legal officer Paul Grewal said the language preserves activity-based rewards tied to actual participation on crypto platforms, which is what the bank lobby has requested.
The Senate Banking Committee delayed plans for a Clarification Act rate increase enacted earlier in January. Other negotiating points remain unresolved, but the concession language is by far the biggest obstacle.
Companies need to restructure their rewards programs from a “buy and hold” model to a “buy and use” model to comply with transaction considerations.