WASHINGTON — Draft legislation aimed at bringing greater clarity to digital asset markets continues to spark debate across the crypto and banking sectors, as lawmakers consider new limits on yield-generating stablecoin products, according to a new report.
The latest version of the Digital Asset Market Clarity Act, known as the CLARITY Act, would restrict platforms from offering returns on stablecoin holdings in ways that resemble traditional bank deposits, Banking Exchange reported.
The measure would apply broadly to digital asset service providers, including exchanges, brokers and their affiliates, and is designed to close regulatory gaps by prohibiting rewards deemed “economically or functionally equivalent” to interest, according to the report.
As the CU Daily has reported, industry representatives reviewed the updated draft on March 23, while trade groups met with members of the Senate Banking Committee to discuss its implications, Banking Exchange said. Bank representatives are also expected to review the proposal and engage with lawmakers, highlighting its potential impact beyond the crypto sector.
SEC, CFTC, Treasury Involved
Under the legislation, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department would be tasked with jointly determining which types of rewards are permissible. The agencies would also be required to establish anti-evasion rules within a year to guide how firms structure incentives tied to stablecoins.
The proposal is expected to have limited impact on non-yield-bearing stablecoins such as USDC and USDT. However, decentralized finance platforms and exchanges that offer passive income products could face increased scrutiny, reflecting the bill’s focus on yield-bearing features rather than everyday stablecoin use, according to Banking Exchange.
Mixed Reaction
Reaction to the draft has been mixed, the publication stated. Some industry participants warn the restrictions could reduce earning opportunities for users, while others view the framework as a compromise that could provide regulatory clarity. The proposal has also sparked broader debate online over financial inequality and whether traditional banks could retain a competitive advantage under the new rules, Banking Exchange reported.
