US bill restricts yield rewards on stablecoins

TLDR

A new US Senate draft would largely ban interest-like yield on stablecoin balances while still allowing limited activity-based rewards.

1. The draft CLARITY Act text bans passive yield on stablecoin holdings and anything economically equivalent to bank deposit interest.
2. Platforms could still offer activity-based rewards, but regulators will define what is allowed, creating significant uncertainty for business models and users.
3. The bill is not law yet, and upcoming Senate work plus later rulemaking will decide how strict stablecoin reward limits actually become.

Deep Dive

1. What The Draft Bill Actually Restricts

The latest Senate draft of the Digital Asset Market CLARITY Act would prohibit platforms from paying yield for simply holding stablecoins and from offering any structure that is economically or functionally equivalent to interest on bank deposits. This ban would apply directly or indirectly across exchanges, brokers, and affiliated services, closing off most balance-based reward schemes for stablecoins like USDC or USDT as described in this overview.

Non-yield-bearing, payment-focused stablecoins remain permitted, but products that make a stablecoin behave like a savings account become the target. This aligns with banks lobbying to prevent unregulated deposit-like competitors.

2. Activity-Based Rewards And Who Is Impacted

The same draft explicitly allows activity-based rewards tied to trading, payments, loyalty, or other usage, as long as they are not equivalent to deposit interest according to draft summaries. The SEC, CFTC, and Treasury must jointly define what counts as permissible rewards and write anti-evasion rules within one year of enactment.

This ambiguity is a key pain point. Crypto firms warn that the economic equivalence test is vague and could be interpreted very strictly, while some see it as a workable compromise that still allows promotional rewards. Equity markets are already reacting: Circle and Coinbase, which derive meaningful revenue from stablecoin-related products, saw sharp stock drops after the language surfaced, reflecting concern that their future upside from yield-style offerings could be capped as reported here.

3. Legislative Status And What To Watch Next

This is draft language, not final law. The CLARITY Act has passed the House and one Senate committee, but it still needs a Senate Banking Committee markup, a full Senate vote, reconciliation with other versions, and presidential approval according to multiple policy reports.

Even if the bill passes, the real details will follow in rulemaking, where agencies decide how strict economically equivalent to interest will be. Industry and banking feedback in the coming months, plus any redrafting around that standard, are the main catalysts to watch.

Conclusion

The current CLARITY Act draft aims to stop stablecoins from competing directly with bank deposits by banning passive yield, while still leaving room for limited, activity-based rewards. For crypto users and platforms, the big open question is how regulators will interpret economic equivalence and how far they will go in restricting creative reward designs. The combination of congressional negotiations and later agency rulemaking will determine whether stablecoin rewards become tightly constrained or just more structured and usage focused in the United States.