US Senators Thom Tillis and Angela Alsobrooks reached an agreement to ban stablecoin returns in a new draft law that closely concerns the cryptocurrency industry. The text that the senators agreed on was written in a way that would prevent stable cryptocurrencies from offering direct or indirect interest. While this issue has previously been addressed in different regulations since the beginning of the year, the new draft published aims to create a clear framework for the controversial area.
Stablecoin returns will be completely banned
According to the shared draft law, companies issuing stablecoins are prohibited from offering rewards that generate interest or similar income simply because they hold customer assets. It is stated that banks accepting deposits play a critical role in the financial system, and stablecoin issuers providing similar services may harm these institutions. In other words, the regulation prevents the return from holding stable cryptocurrencies or payment methods similar to bank deposit interest.
In the statements in the text, it is emphasized that any institution is prohibited from providing cash, tokens or any other return to a customer just because he holds a stablecoin, and such transactions may have results similar to bank deposits.
The text states, “No covered party may, directly or indirectly, pay any returns, rewards or interest due to retained payment stablecoins. Likewise, methods that would produce the same economic or functional outcome as interest-bearing deposits should not be used.” expressions were used.
Loyalty programs are also included in the scope
Another noteworthy detail in the new regulation is that there are restrictions not only on returns similar to bank deposits, but also on reward or loyalty programs. Accordingly, incentives resulting from sincere commercial activities or transactions will be exempt from the ban, but loyalty or point programs based solely on holding stablecoins are also included in the ban. Thus, applications that directly compete with banks’ core products will be prevented.
It is stated that this ban focuses only on providing unstable stablecoin-based returns, not on situations similar to the credit card reward system widely applied in the financial sector.
Senate process and first comments from the industry
The process of drafting the bill accelerated after the Senate Banking Committee’s general Clarity Act review session, planned for January, was postponed at the last minute. In March, a memorandum that allowed the awards to be structured in a way that did not violate banking regulations was presented to the public.
The new draft published includes an approach that prioritizes the financial stability of the banking system, as well as preventing stablecoin issuers from offering interest-like rewards. Industry representatives argue that although certain incentive mechanisms are limited, innovative reward programs that do not compete with core bank products should be supported.
Cody Carbone, CEO of Digital Chamber, which operates in the crypto industry, said in his statement: “We welcome the public announcement of the new regulatory text regarding stablecoin returns. An important step has been taken with the committee to resolve the last remaining controversial issues. While this process continues, we will continue to support reward mechanisms that empower the consumer and increase innovation and competition in the digital asset ecosystem.” shared his expressions.
The details of the bill have not yet been finalized, but it is anticipated that this development may have serious consequences for the crypto industry and traditional financial institutions. The process regarding the joint initiative of Senators Tillis and Alsobrooks will be completed with a final decision after negotiations in the committee.
