The Senate’s CLARITY Act, the leading crypto market structure bill—has circulated a revised draft that would ban stablecoin yield offerings, reflecting pressure from banking interests.
The updated language prohibits any return, direct or indirect on idle stablecoin balances, while permitting rewards tied to user activity. The shift marks a major concession from crypto industry negotiators to banking stakeholders, and it’s expected to accelerate the bill’s path through committee within weeks.
According to details first shared with journalist Eleanor Terret, the latest version of the Crypto market structure bill introduces a sweeping prohibition on yield. Platforms would be barred from offering any form of return—direct or indirect—for simply holding stablecoins, particularly if those returns resemble traditional bank deposits.
The restriction in the Crypto market structure bill would apply broadly across digital asset service providers, including exchanges, brokers, and affiliated entities. Lawmakers appear intent on closing loopholes by banning mechanisms deemed “economically or functionally equivalent” to interest.
This approach reflects mounting pressure from banking stakeholders, who argue that yield-bearing stablecoins could disrupt financial stability and create unfair competition with traditional deposit products.
Regulatory Deadlock Pushes Crypto Market Structure Bill Forward
The Crypto market structure bill has faced months of gridlock, with negotiations stalling since a Senate Banking Committee draft circulated in mid-January. That earlier version of the Crypto market structure bill introduced controversial provisions affecting decentralized finance (DeFi) and stablecoin incentives.
At the heart of the impasse lies a fundamental disagreement: banks have pushed for strict limits on stablecoin yield, while crypto firms have argued such restrictions could stifle innovation.
The banking sector has also raised concerns about overlaps with the proposed GENIUS Act, warning that gaps in regulation might expose the broader financial system to risk. As a result, lobbyists urged lawmakers to expand the Crypto market structure bill to include explicit language banning yield not just for issuers, but for intermediaries like exchanges and brokers.
In response, policymakers began refining the Crypto market structure bill to strike a compromise. Earlier proposals allowed issuers to offer rewards tied to user actions—such as account sign-ups or cashback programs—while prohibiting passive interest accumulation.
That compromise gained traction during a White House-facilitated meeting last month. Patrick Witt, executive director of the President’s Council of Advisors on Digital Assets, reportedly presented a draft of the Crypto market structure bill that effectively sidelined yield on idle balances.
“The debate has narrowed significantly,” a policy insider familiar with the discussions said. “At this stage, the Crypto market structure bill is less about whether yield is allowed and more about how incentives can be structured without crossing regulatory lines.”
Rewards Framework Emerges in Crypto Market Structure Bill
The latest iteration of the Crypto market structure bill does leave room for certain user incentives—but under tightly controlled conditions.
According to Terret’s reporting, the proposal permits rewards linked to user activity, including loyalty schemes, promotional campaigns, or subscription-based perks. However, these must not resemble interest payments in either economic substance or functional design.
To enforce this distinction, the Crypto market structure bill mandates collaboration between the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Treasury Department. These agencies would have one year to define acceptable reward structures and implement anti-evasion rules.
This multi-agency approach underscores the complexity of regulating digital assets, particularly as lawmakers attempt to future-proof the Crypto market structure bill against creative workarounds.
A senior regulatory official noted, “Clarity is the priority. The Crypto market structure bill aims to ensure that incentives remain tied to genuine user engagement—not passive capital accumulation.”
Industry Split Over Crypto Market Structure Bill Language
Reaction to the revised Crypto market structure bill has been sharply divided within the crypto sector.
Some executives view the updated language as overly restrictive. One industry leader who reviewed the draft described it as “a departure from prior discussions with the White House,” warning that the “economic equivalence” standard could be interpreted broadly by regulators.
“The concern is ambiguity,” the source said. “If regulators take a hardline view, the Crypto market structure bill could severely limit how platforms design incentives.”
Others, however, see the draft as a pragmatic compromise. Another industry participant characterized the Crypto market structure bill as “largely aligned with expectations,” arguing that it strikes a workable balance between innovation and regulatory safeguards.
“This is probably the best achievable outcome,” the source said. “The Crypto market structure bill makes it clear that stablecoins cannot function like interest-bearing accounts, while still preserving transaction-based rewards.”
Notably, some stakeholders believe the current draft is less restrictive than earlier proposals, including the Tillis-Alsobrooks framework, which imposed tighter limitations on crypto activities.
Banking representatives are expected to weigh in next, with a separate review session scheduled. Their response could determine whether the Crypto market structure bill finally breaks its legislative deadlock—or faces yet another round of revisions.
As negotiations intensify, the future of stablecoin economics hangs in the balance. What’s clear is that the Crypto market structure bill is rapidly evolving into a defining piece of legislation—one that could reshape the competitive dynamics between crypto platforms and traditional finance for years to come.
