The U.S. Senate Banking Committee has released a revised draft of its long-running crypto market structure legislation, moving negotiations forward on two of the sector’s most contentious issues: stablecoin rewards and decentralized finance oversight. The updated proposal, filed late Monday, reflects months of discussions between lawmakers, regulators, banks, and the digital asset industry. It outlines how federal agencies would divide oversight responsibilities across crypto markets while providing clearer definitions for digital asset service providers. The bill also aims to reduce regulatory uncertainty that has weighed on institutional participation, particularly by setting boundaries for how stablecoins and DeFi protocols are treated under US law. While the draft addresses several technical and policy disputes, it notably avoids provisions related to ethics concerns raised by some lawmakers regarding public officials’ involvement in crypto-related businesses.
A central compromise in the draft focuses on stablecoin rewards and yield. Under the proposed language, digital asset service providers would be prohibited from paying interest or yield solely for holding a payment stablecoin. However, the restriction does not extend to activity-based incentives, such as rewards linked to transactions or usage. This approach reflects an attempt to balance concerns from the banking sector about deposit-like products with industry arguments that certain incentives are integral to payment networks. The wording leaves room for interpretation, potentially allowing firms to structure programs that resemble yield without being classified as interest. The bill adopts definitions from prior legislation, applying the rule broadly across exchanges, custodians, and stablecoin issuers operating within the US regulatory perimeter.
Beyond stablecoins, the legislation introduces new provisions aimed at decentralized finance and developer protections. The draft includes language intended to clarify that certain DeFi activities and software developers are not automatically subject to the same regulatory treatment as centralized intermediaries. It also proposes updated classifications for digital assets, including distinctions that could affect how tokens are treated under securities law. Lawmakers are expected to debate and amend the bill during upcoming committee sessions, with parallel consideration planned in other Senate committees. If advanced, the legislation would represent one of the most comprehensive efforts to date to integrate stablecoins, DeFi, and broader crypto markets into the US financial regulatory framework.
