"Cryptocurrency Clarity Act" Latest Draft: Stablecoin Holdings Balance Cannot Bear Interest, Industry Criticizes Restrictions as Overly Stringent

The latest version of the U.S. Senate’s Digital Asset Market Clarity Act has sparked strong opposition from the cryptocurrency industry due to its language regarding stablecoin yields. According to sources familiar with the draft, the new provisions explicitly prohibit users from earning any form of rewards based on their stablecoin balances. Industry experts generally believe this approach is overly restrictive and the language is not sufficiently clear.

Banking Industry Pressure Limits Stablecoin Interest

This revision was announced after Senators Angela Alsobrooks and Thom Tillis reached a bipartisan agreement last Friday. The new provisions ban interest-bearing balances and also restrict any practices that could make stablecoin programs effectively equivalent to bank deposits. Further restrictions are placed on other potential permissible activities.

The banking sector has long insisted that stablecoin reward programs should not resemble interest-bearing bank deposits, arguing that competing products could weaken banks’ lending capacity. The final compromise allows rewards based on user “usage behavior,” but not on the holding balance.

Closed-Door Review at Capitol Hill

On Monday, the cryptocurrency industry conducted its first closed-door review of the revised draft at Capitol Hill in Washington. This marks an important step forward in advancing the bill through the Senate Banking Committee. If approved by the committee, lawmakers will prepare an integrated version for a full Senate vote.

Multiple Controversies Remain

While stablecoin yield restrictions have been a major obstacle to the bill’s progress, they are not the only issues. Industry stakeholders are also awaiting the final decentralized finance (DeFi) regulatory framework—Democrats are demanding effective anti-money laundering protections. Additionally, Democrats insist that government officials should be prohibited from personally profiting from the crypto industry, a clause clearly aimed at President Trump.

Notably, last year the U.S. passed the GENUIS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), marking the country’s first major legislation targeting specific areas of cryptocurrency. However, industry experts see this as a two-step strategy, with the Clarity Act being the key to fully integrating digital assets into the U.S. financial system. It is expected to eliminate regulatory uncertainty and attract more institutional investors and developers.

This article, “Cryptocurrency Clarity Act” Draft: Stablecoin Balances Cannot Earn Interest, Industry Criticizes Overly Restrictive Limits, first appeared on Chain News ABMedia.