US Senators Prohibit Yield on Inactive Stablecoins in New Bill Language

In a draft market structure bill, US senators have proposed a clear prohibition on stablecoin rewards for idle holdings. The legislation instead sanctions yield tied to specific user actions, defining a compromise ahead of the committee’s markup.

Chairman Tim Scott of the Senate Banking Committee released the updated bipartisan draft, calling it a negotiated bill. The text seeks to finalize one of the most debated issues following extensive discussions with crypto industry stakeholders and banks.

According to the bill, it would be unlawful for service providers to pay interest or yield simply for a user holding payment stablecoins. Permissible rewards are those connected to activities, including conducting transactions, staking, providing liquidity, or putting up collateral.

This wording incorporates a compromise suggested by Democratic Senator Angela Alsobrooks, a leading negotiator, last week. Under her proposal, a crypto exchange can offer yield when a customer takes steps like selling a stablecoin, but not for maintaining a static balance.