Cryptocurrency industry insiders first saw the revised market structure bill in the Senate, and the initial impression was that the language on the allowable yield of stablecoins was too limited 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 performance payments simply for owning a stablecoin. It would also restrict any approach that makes the program equivalent to a bank deposit, and applies additional limits to other potentially permitted activities, the person said, adding that the mechanics for determining activity-based stablecoin rewards remain unclear.
The crypto industry got its first look at the revised section of the Digital Asset Market Clarity Act on Monday in a closed-door review on Capitol Hill in Washington, representing an attempt to clear a hurdle in the effort to get a hearing in the Senate Banking Committee. Bankers had insisted that stablecoin rewards were nothing like interest-bearing bank deposits, because they argued the competing product could cripple the industry and strangle lending. Therefore, the pledge will allow reward programs on users’ stablecoin activities, but not on balances.
A similar version of the Clarity Act passed the House last year, and another version passed a margin hearing in the Senate Agriculture Committee. The banking panel represents a big step that would bring the legislation to a place where lawmakers could prepare a final combined version that would get a vote from the entire Senate.
The lobbying fight over stablecoin performance between the cryptocurrency sector and the banking industry had stifled progress on the legislation for some time. But it is not the only conflicting point. The industry will still need to see the final approach to oversight of the decentralized finance (DeFi) space, which remained an area of concern for Democrats who wanted to ensure protections against illicit finance. And Democrats have also insisted on the need to prohibit senior government officials from personally benefiting from the crypto industry, a provision aimed squarely at President Donald Trump.
Although the industry recorded a tremendous 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 intended as the first, less important step in a two-pronged policy approach that concludes with the Clarity Act.
That full arrival of cryptocurrencies into the US financial system will eliminate regulatory uncertainty for any investors who have doubted their participation in the sector. Digital asset experts believe it will open doors between institutional investors and developers who want to build on the technology.
