Crypto industry insiders got their first look at the revised market structure bill in the Senate, and the first impression was that the language on the permitted yield of stablecoins was too narrow and unclear, according to a person familiar with the current draft.
The new language, announced Friday by Senators Angela Alsobrooks and Thom Tillis, would prohibit yield payments for simply holding a stablecoin. It would also restrict any approach that makes the program equivalent to a bank deposit, and apply additional limits to other potentially permitted activities, the person said, adding that the mechanisms for determining stable activity-based rewards remain uncertain.
The crypto industry got its first look at the revised section of the Digital Asset Market Clarity Act on Monday during a closed-door review at the Capitol in Washington, representing an attempt to clear a hurdle in efforts to secure a hearing at the Senate Banking Committee. Bankers had insisted that stablecoin rewards were nothing like interest-bearing bank deposits, as they claimed the rival product could cripple the industry and choke off lending. Thus, the compromise will allow rewards programs on stable user activities, but not on sales.
A similar version of the Clarity Act passed the House of Representatives last year, and another version was approved during a markup hearing in the Senate Agriculture Committee. The banking panel represents an important step that would bring the legislation to a point where lawmakers could prepare a final combined version that would get a vote from the full Senate.
The lobbying fight over stablecoin yield between the crypto industry and the banking industry has stifled progress on the legislation for some time. But that’s not the only sticking point. The industry will still have to see the final approach to oversight of the decentralized finance (DeFi) space, which had remained an area of concern for Democrats who wanted to ensure protection against illicit finance. And Democrats also stressed the need to prohibit high-ranking officials from personally profiting from the crypto industry – a provision aimed squarely at President Donald Trump.
Although the industry scored a huge victory last year when the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act became the first major US law to govern a segment of the crypto industry, it was seen as the least important first step in a one-two policy approach that ends with the Clarity Act.
This full-fledged arrival of crypto into the US financial system will eliminate regulatory uncertainty for any investors who have been hesitant to get involved in the sector. Digital asset insiders believe this will open doors for institutional investors and developers who want to build on the technology.
