A revised draft of the US Senate’s Digital Asset Market Clarity Act would allow crypto firms to offer rewards tied to how stablecoins are used, while drawing a firm line against interest paid simply for holding the tokens.
The updated proposal, released by Senate Banking Committee Chair Tim Scott, signals a more nuanced approach to stablecoin regulation. Under the draft, incentives linked to payments, wallets, staking and broader network participation would be permitted without reclassifying stablecoins as securities or bank-like products.
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Scott said the changes aim to provide clearer rules for consumers and businesses while preserving innovation in digital payments. He described the draft as the result of months of negotiations and feedback across the committee, focused on balancing market growth with regulatory certainty.
The treatment of stablecoin rewards has become one of the most contested issues in Washington’s crypto policy debates. Banking groups argue that yield-bearing stablecoins blur the line between payment instruments and deposits. Crypto firms counter that many reward programs resemble fintech loyalty schemes rather than interest-bearing accounts.
Permitted rewards tied to usage, not passive holding
The draft bill explicitly exempts incentives connected to real economic activity. These include rewards linked to payments, transfers, remittances and settlement activity, as well as benefits associated with using wallets, accounts, platforms or blockchain networks.
Loyalty programs, promotional incentives, subscription benefits and rebates tied to stablecoin usage would also be allowed. The language extends further into crypto-native activity, permitting rewards tied to liquidity provision, collateralization, governance participation, validation and staking.
At the same time, the draft draws a clear boundary. Digital asset service providers would be prohibited from paying any form of interest or yield solely for holding a payment stablecoin, regardless of whether the return is delivered in cash, tokens or other consideration.
The legislation remains a work in progress. The Senate Agriculture Committee has delayed its markup of the broader crypto market structure package until late January, citing the need to build wider bipartisan support before moving forward.
Draft bill identifies permissible activities. Source: Senate
Banks warn of competitive pressure from stablecoin rewards
Community banking groups have continued to press lawmakers to tighten restrictions. Last week, a coalition of US community banks urged Congress to amend the separate GENIUS Act, arguing that stablecoin issuers are exploiting loopholes to pass yield to users indirectly through exchanges and partners.
The banks warned that such programs could siphon deposits away from local lenders, reducing credit availability for small businesses, farmers, students and homebuyers.
Crypto industry groups have pushed back strongly. In a recent letter to the Senate Banking Committee, the Crypto Council for Innovation and the Blockchain Association argued that payment stablecoins are not used to fund loans and that limiting reward programs would undermine competition, innovation and consumer choice.
As lawmakers debate the final contours of stablecoin regulation, the CLARITY Act draft highlights a growing effort to distinguish between passive yield products and incentives designed to support payments and network activity.