The U.S. Senate is advancing a revised crypto market structure bill that would bar passive interest payments on payment stablecoins, extending earlier issuer-focused limits to exchanges and other intermediaries. The latest draft, circulated Monday following a Jan. 9 release by Senate Banking Committee Chair Tim Scott, prohibits digital asset service providers from paying interest or yield solely for the act of holding a stablecoin while preserving carve-outs for activity-based rewards.
What the draft would change
An amended draft of the Digital Asset Market Clarity Act (the “CLARITY Act”) states that “a digital asset service provider may not pay any form of interest or yield […] solely in connection with the holding of a payment stablecoin.” The provision appears in Section 404, titled “Preserving Rewards for Stablecoin Holders.”
The bill seeks to close a gap left by last summer’s GENIUS Act, which banned stablecoin issuers from paying “any form of interest or yield” to token holders but did not explicitly address rewards distributed by exchanges or other third-party platforms. The new draft applies the prohibition to non-issuers, aiming to prevent deposit-like returns on idle stablecoin balances.
Carve-outs for activity-based rewards
While barring passive returns, the draft preserves exceptions for rewards tied to specific network or market functions. Under the current text, stablecoin rewards would not be prohibited when connected to:
- Transaction processing or payment activity
- Providing liquidity or collateral
- Governance, validation, staking, or similar ecosystem participation
- Loyalty or promotional programs tied to user activity
One source familiar with the negotiations said the language includes “many exemptions” and stops short of a blanket ban on all reward programs.
Banking and industry response
Banking trade groups have urged lawmakers to extend the GENIUS Act’s issuer prohibition to exchanges and other intermediaries, arguing that yield-bearing stablecoin programs risk disintermediating deposits and weakening bank balance sheets. “Bankers are worried that a yield-bearing stablecoin could disintermediate deposits and erode their balance sheets,” said Susan Sullivan, senior vice president for congressional relations at the Independent Community Bankers of America.
Crypto industry voices pushed back. SkyBridge Capital founder Anthony Scaramucci argued on X that banks are trying to block stablecoin yield to avoid competition. Coinbase and other exchanges that offer stablecoin “rewards” have warned the proposal threatens a key product line, with Coinbase signaling it could withdraw support for the bill if broad limits on stablecoin rewards remain.
What’s next
Senate Banking Committee members are continuing to negotiate the market structure package, and the draft could change as amendments are considered. As written, the CLARITY Act would prohibit crypto companies from paying interest to consumers solely for holding a payment stablecoin while preserving activity-based rewards and incentives.
The outcome will shape how U.S. platforms design stablecoin programs and could influence where deposit-like capital ultimately resides—on bank balance sheets or within digital asset markets. Ethereum co-founder Vitalik Buterin recently highlighted separate long-term concerns around dollar-pegged designs, noting on X that systems built for resilience should not depend indefinitely on a single national currency, adding broader context to policymakers’ focus on stablecoin structure and risk.