Banks Win Key Battle as Crypto Bill Bars Stablecoin Interest Payments
Senate lawmakers released an updated crypto market structure bill that prohibits digital asset service providers from paying any form of interest or yield solely for holding payment stablecoins. This provision responds to lobbying from community banks, concerned that stablecoin yields could drain deposits from traditional banks. The draft allows exceptions for activity-based rewards, such as transaction incentives, loyalty programs, liquidity provision, or ecosystem participation. The bill also requires the SEC and CFTC to establish clear disclosure rules for digital asset compensation and remind consumers that stablecoins are not investment products or insured deposits. Democratic senators criticized the rushed legislative process, noting that lawmakers and the public will have little time to review and amend the lengthy bill before Thursday’s markup. Industry analysts expect delays due to unresolved disagreements and short preparation time. The debate reflects ongoing industry and banking group concerns about regulatory loopholes and the potential impact of yield-bearing stablecoins on traditional banking.
