Senators finalize stablecoin yield rules in the CLARITY Act, banning interest payments akin to bank deposits.
Senators Thom Tillis and Angela Alsobrooks have come to an agreement on the yield provisions for stablecoins within the CLARITY Act, a legislative effort aimed at regulating the U.S. cryptocurrency landscape. According to Punchbowl News, this finalized section prohibits crypto companies from offering rewards that are similar to bank deposit interest.
The updated legislation explicitly states that no interest or yield may be paid to clients merely for holding stablecoins, a restriction that extends to third-party platforms like cryptocurrency exchanges, which are also barred from providing income on dormant balances.
Despite this ban, the legislation allows companies to offer rewards linked to genuine activities within the crypto ecosystem. Additionally, it mandates that regulators create a new framework for stablecoins, which will include guidelines for disclosures and a list of acceptable income-generating activities.
Industry Response
The response from the cryptocurrency community has been varied, but many stakeholders believe this development enhances the bill's likelihood of being passed. Faryar Shirzad, Chief Counsel at Coinbase, commented on the outcome, stating, "In the end, banks succeeded in tightening restrictions on rewards, but we preserved what truly matters—the ability for Americans to earn rewards for the actual use of crypto platforms and networks."
Conversely, Mert Mumtaz, CEO of Helius Labs, voiced his confusion regarding the limitations imposed on investors, questioning why they cannot earn risk-free returns on their investments without involving banks. Alex Thorn, head of corporate research at Galaxy Digital, indicated that the publication of the text suggests the Senate Banking Committee may soon schedule a review of the document, likely within the week following May 11. However, he cautioned that this could lead to heightened opposition from banking institutions.
It is worth noting that back in April, Senator Tillis had mentioned the potential for delaying the review of the CLARITY Act.
