The post Stablecoin Bill May Ban Yield Rewards, as per New Crypto Rules appeared first on Coinpedia Fintech News
A new U.S. proposal to restrict stablecoin yield and rewards is drawing mixed reactions from the crypto industry. The draft aims to stop interest-like returns on stablecoins while still allowing limited user incentives, as lawmakers move closer to finalizing stablecoin regulations.
The draft law is already creating debate across the crypto industry, as Bank reps are set to review this by tomorrow.
Stablecoin Bill Proposal Could Ban Yield on Stablecoins
According to details shared with stakeholders, the proposal would block platforms from offering yield for holding stablecoins, whether directly or indirectly. The rule would apply to exchanges, brokers, and their affiliated entities to prevent workarounds.
It also bans any rewards considered “economically equivalent” to interest, meaning stablecoins cannot function like savings accounts.
This is because regulators want to stop stablecoins from becoming interest-bearing deposit products. This shows the government wants a clear difference between banks and stablecoin companies.
Activity-Based Rewards May Still Be Allowed
However, the draft allows activity-based rewards tied to user engagement. These may include loyalty programs, promotional campaigns, or subscription-style benefits.
The key condition is that these incentives must not behave like interest payments. Regulators want to ensure users are rewarded for activity, not simply for holding balances.
The proposal also assigns the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Treasury Department to jointly define allowed reward models. These agencies would have up to one year to finalize definitions and introduce anti-evasion rules.
Crypto Industry Reaction Remains Mixed
According to crypto journalist Eleanor Terrett, early reactions from industry leaders are mixed. Some believe the proposal is more restrictive than expected and the definitions are still unclear. They worry future regulators may interpret the rules more strictly.
Others view the proposal as a reasonable middle ground. They believe it protects users while preserving promotional and activity-based rewards that help platforms grow adoption.
What Happens Next
Bank representatives are expected to review the draft next, which could influence the final wording by 25th March. After that, lawmakers may move toward formal legislative text.
If adopted, regulators would begin defining permitted rewards within one year, shaping how stablecoin incentives work across the crypto market.
