The latest legislative draft on stablecoin rewards suggests a compromise between crypto platforms and traditional banks. While stablecoin interest payments would be banned, activity-based incentives like loyalty programs remain permissible. Regulators are tasked with defining the new rules, which industry participants view as restrictive but workable.
New legislative text reviewed on Capitol Hill would prohibit cryptocurrency platforms from offering interest-like rewards on stablecoin holdings. The compromise draft, discussed by crypto and banking representatives, explicitly bars rewards that are ‘directly or indirectly’ similar to a bank deposit. According to sources, this creates a broad industry-wide ban for all digital asset service providers.
However, the proposed rules will permit activity-based rewards linked to user engagement. These include loyalty, promotional, and subscription programs, provided they are not considered interest. Regulators such as the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and U.S. Treasury must jointly define permissible rewards and establish enforcement rules.
Industry reactions to the draft text varied. One participant noted the proposal was “very different” from previous White House discussions and that the ‘economic equivalence’ standard was vague, potentially allowing strict regulatory interpretation. They also raised concerns about provisions limiting how rewards are tied to balances or transaction volumes.
Another industry player stated the draft was “mostly in line with expectations” and represented a “fair compromise.” They explained it still allows for transaction-based rewards while preventing stablecoins from functioning like interest-bearing deposit accounts. The source believed this update was the “best possible outcome,” as a previous Tillis-Alsobrooks proposal would have been more restrictive. Bank representatives will review the text this week.
