Proposed US crypto law puts stablecoin income streams for clients at risk
US senators are now finalizing a “market structure” bill that would define how digital assets are regulated and, crucially, whether platforms can keep paying rewards on stablecoin balances, according to Reuters.
The outcome could shape where crypto platforms base operations, how they design yield products, and how attractive those products look next to insured deposits and money market funds.
According to Reuters, the draft would:
- Clarify when tokens are securities or commodities
- Spell out the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission
- Give the CFTC authority over spot crypto markets, which the industry generally prefers
The most material fight for markets now sits around stablecoin rewards.
As per CNBC, banks want Congress to close what they see as a loophole in last year’s GENIUS Act.
That law stopped stablecoin issuers from paying interest “solely” for holding tokens, but it did not stop exchanges and other intermediaries from offering rewards on those balances.
The American Bankers Association has warned that large‑scale stablecoin rewards could pull deposits out of the traditional system and hurt lending to households and small businesses.
Crypto firms argue the opposite.
Reuters said that Summer Mersinger of the Blockchain Association accused “Big Banks” of running a pressure campaign to “eliminate stablecoin rewards” and “choke off consumer choice.”
In the latest Senate draft, Reuters reported that platforms would not be allowed to pay interest simply for holding a stablecoin, but could still offer rewards tied to specific actions such as sending payments or joining loyalty programs.
The SEC and CFTC would also have to draft joint disclosure rules for any such rewards.
Bloomberg reports that one compromise under discussion would only allow regulated financial institutions or firms with banking‑type charters to offer stablecoin rewards.
Five crypto companies have already received conditional approvals to become national trust banks, a move community banks and trade groups oppose on financial‑stability grounds, Bloomberg said.
For large platforms, the stakes are significant.
Bloomberg reported that Coinbase shares interest income on reserves backing Circle’s USDC stablecoin and earns a steady stream of revenue from USDC parked on its platform.
Coinbase currently offers 3.5 percent rewards on some USDC balances and its total stablecoin revenue was projected at about US$1.3bn in 2025, according to Bloomberg.
If the final bill sharply limits platform‑based rewards, that could reduce incentives for clients to hold stablecoins on exchanges and force business‑model changes.
Policy risk extends beyond rewards. CNBC said lawmakers are still wrestling with:
- How to treat decentralised finance platforms and ensure developers are not held liable simply because their code is misused
- Whether to enshrine the right to self‑custody crypto
- Whether elected officials, including the president, should be barred from profiting off digital asset ventures while in office
Process and timing add another layer of uncertainty.
According to Reuters, the Senate Banking and Agriculture Committees will mark up their respective drafts and then merge them into one bill for a Senate vote.
Crypto advocates told CNBC this is a “key window” to move legislation before the 2026 midterms, but Bloomberg reported that tensions over stablecoin rewards have already weakened bipartisan support and may push the odds of passage in the near term below 70 percent.
If the bill stalls again, Reuters noted that crypto firms will remain dependent on shifting regulatory guidance rather than a clear statute — prolonging uncertainty around how stablecoins and related yield products can be marketed, structured and supervised.
