A new U.S. proposal to restrict stablecoin yield and rewards is drawing mixed reactions from the crypto industry. The draft aims to stop interest-like returns on stablecoins while still allowing limited user incentives, as lawmakers move closer to finalizing stablecoin regulations.
The draft law is already creating debate across the crypto industry, as Bank reps are set to review this by tomorrow.
According to details shared with stakeholders, the proposal would block platforms from offering yield for holding stablecoins, whether directly or indirectly. The rule would apply to exchanges, brokers, and their affiliated entities to prevent workarounds.
It also bans any rewards considered “economically equivalent” to interest, meaning stablecoins cannot function like savings accounts.
This is because regulators want to stop stablecoins from becoming interest-bearing deposit products. This shows the government wants a clear difference between banks and stablecoin companies.
However, the draft allows activity-based rewards tied to user engagement. These may include loyalty programs, promotional campaigns, or subscription-style benefits.
The key condition is that these incentives must not behave like interest payments. Regulators want to ensure users are rewarded for activity, not simply for holding balances.
The proposal also assigns the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Treasury Department to jointly define allowed reward models. These agencies would have up to one year to finalize definitions and introduce anti-evasion rules.
According to crypto journalist Eleanor Terrett, early reactions from industry leaders are mixed. Some believe the proposal is more restrictive than expected and the definitions are still unclear. They worry future regulators may interpret the rules more strictly.
Others view the proposal as a reasonable middle ground. They believe it protects users while preserving promotional and activity-based rewards that help platforms grow adoption.
Bank representatives are expected to review the draft next, which could influence the final wording by 25th March. After that, lawmakers may move toward formal legislative text.
If adopted, regulators would begin defining permitted rewards within one year, shaping how stablecoin incentives work across the crypto market.
It’s a draft law to regulate stablecoins by banning interest-like yield while allowing limited activity-based rewards to protect users.
It blocks platforms from offering yield on holdings and lets regulators define allowed rewards, ensuring they aren’t similar to interest.
Yes, but only activity-based rewards like promotions or loyalty perks. Passive earnings for holding stablecoins would be restricted.
Users may lose passive income options, while platforms must redesign rewards, focusing on engagement instead of balance-based earnings.
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