The US Senate has released a revised draft of its long awaited crypto market structure legislation, bringing fresh clarity to how stablecoins and digital asset platforms may operate in the United States. The proposal outlines when stablecoin rewards are permitted and where lawmakers intend to draw firm regulatory boundaries.
The draft, circulated by Senate Banking Committee leadership, arrives as Congress faces mounting pressure to regulate digital assets more clearly. Stablecoins, which are pegged to fiat currencies like the US dollar, now sit at the center of that debate.
A Push for Regulatory Clarity
The updated draft is designed to provide a unified framework for digital asset regulation. Lawmakers say the bill aims to replace years of regulatory uncertainty with clear definitions, responsibilities, and compliance standards.
Supporters argue that the absence of a clear market structure has driven innovation offshore and left consumers exposed. They say the legislation would create certainty for companies while preserving protections against fraud, misuse, and systemic risk.
Stablecoins are a major focus because of their role as a bridge between traditional finance and crypto markets. They are widely used for trading, payments, remittances, and decentralized finance applications.
What the Draft Allows on Stablecoin Rewards
One of the most closely watched sections of the proposal addresses stablecoin rewards. Under the new language, companies may offer incentives tied to active use of stablecoins. These include rewards linked to transactions, payments, staking, liquidity provision, or other participation within a network or platform.
Lawmakers describe these incentives as activity based rewards rather than financial yield. The distinction is intended to ensure that stablecoins function as payment tools rather than deposit substitutes.
According to the draft, these rewards do not automatically classify a stablecoin as a security or banking product, provided the incentives are linked to real usage rather than passive holding.
Clear Restrictions on Passive Yield
While the bill allows activity based rewards, it draws a strict line against passive yield. The draft prohibits stablecoin issuers and platforms from paying interest or similar returns simply for holding a stablecoin balance.
This provision reflects concerns from lawmakers and banking regulators who worry that interest bearing stablecoins could compete directly with bank deposits. They argue that such competition could weaken the traditional banking system and reduce available credit in the broader economy.
The language mirrors earlier legislative efforts that sought to prevent stablecoins from functioning like unregulated savings accounts. Lawmakers involved in drafting the bill say the goal is to protect financial stability while still allowing innovation.
Banking Groups and Crypto Firms Clash
The stablecoin rewards issue has become one of the most contentious aspects of the bill. Banking industry groups have urged Congress to tighten restrictions further, warning that even indirect rewards could lead to deposit flight from regulated banks.
They argue that banks operate under strict capital and liquidity rules, while stablecoin issuers do not face the same obligations. Allowing yield like incentives, they say, would create an uneven playing field.
Crypto industry groups disagree. They contend that activity based rewards are common across fintech platforms and should not be treated as bank interest. Many firms argue that banning rewards would hurt consumers and limit the usefulness of stablecoins for payments and innovation.
Legislative Timeline Moves Forward
The draft is expected to be debated during an upcoming Senate Banking Committee markup session. This stage allows lawmakers to propose amendments and negotiate final language before the bill advances.
At the same time, related legislation in the Senate Agriculture Committee is progressing on a separate timeline. That committee oversees the Commodity Futures Trading Commission, which is expected to play a major role in regulating crypto markets under the new framework.
Lawmakers say coordination between committees is ongoing, though delays suggest negotiations remain complex.
Potential Impact on the Crypto Market
If enacted, the legislation could significantly reshape how stablecoins are offered and marketed in the United States. Companies that rely on rewards to attract users may need to redesign products to ensure incentives are clearly tied to activity.
Supporters believe the bill could unlock broader institutional adoption by reducing regulatory risk. They argue that clearer rules would encourage banks, payment firms, and asset managers to engage more confidently with digital assets.
Critics worry that strict limits on rewards could slow innovation and push crypto businesses to jurisdictions with more flexible frameworks.
A Defining Moment for Stablecoins
As Congress moves closer to formal action, the debate over stablecoin rewards highlights a broader question. Lawmakers must decide whether stablecoins should resemble payment instruments, investment products, or something in between.
The current draft suggests a clear preference. Activity is acceptable. Passive yield is not.
