The US Senate’s new CLARITY bill allows crypto companies to offer activity-based rewards to stablecoin users.
The proposalcalled the Digital Asset Market Clarity Act, reveals that certain rewards and incentives related to the use of stablecoins would be allowed. However, the provision notes that offering rewards does not cause a stablecoin to be treated as a security or bank-like product.
“Families and small businesses benefit from clear rules of the road,” Senate Banking Chairman Tim Scott, who released the amended bill, said in a statement shared with Cointelegraph. “This bill reflects months of hard work, ideas and concerns that have been brought forward across the Committee, and gives everyday Americans the protections and safety they deserve,” he added.
Stablecoin rewards have become a major point of contention between crypto companies and banking groups. Bank groups have argued that stablecoin products that yield returns are akin to deposit-taking or unregulated investment vehicles. Crypto companies say such programs function more like the loyalty points or payment incentives common in fintech.
The bill exempts payments, loyalty, rewards for roles
According to the draft, the ban would not apply to incentives related to everyday financial activity. This includes rewards associated with payments, transfers, remittances and settlements, as well as benefits associated with the use of wallets, accounts, platforms or blockchain networks. Loyalty and promotional programs, subscription-based incentives and rebates associated with the use of stablecoins are also covered.
Related: Banks’ concerns about stablecoins are ‘baseless myths’: professor
The exemption extends further to crypto-native activity. According to the text, rewards linked to the provision of liquidity or collateral, as well as participation in governance, validation, stakes or wider ecosystem activities, would be allowed.
The draft clarified that the digital asset service provider “may not pay any form of interest or yield (whether in cash, tokens or other fees) solely in connection with holding stablecoins for payment.”
The US Senate Agriculture Committee has delayed its markup of a crypto market structure bill until the last week of January, with Chairman John Boozman citing the need for more time to ensure broad bipartisan support.
Related: Charles Hoskinson Doubts CLARITY Act Timeline, Says Trump’s Crypto Czar Should Quit
Community banks urge Congress to close stablecoin yield “loophole”.
Last week, a group of US community bankers called on Congress to amend the GENIUS Act, arguing that stablecoin issuers are exploiting a loophole that allows returns to token holders to be transferred indirectly through exchanges and other partners.
Bankers have warned that rewards programs offered by crypto exchanges could siphon billions of dollars away from community banks, weakening their ability to make loans to small businesses, farmers, students and home buyers.
The Crypto Council for Innovation and the Blockchain Association, two major crypto advocacy groups, rejected the banks in a letter to the Senate Banking Committee last month, arguing that “stable payment coins are not used to finance loans” and that the revisions would stifle innovation and consumer choice.
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