CLARITY Act Draft Restricts Stablecoin Rewards, Banking-Like Yield Curbed

Crypto lobbyists and US regulators discussed a new legislative draft on Capitol Hill after months of talks between crypto and bank representatives. The latest “CLARITY Act” proposal would stop crypto platforms from offering stablecoin rewards that function like interest-bearing deposits. Under the draft, stablecoin rewards are banned “directly or indirectly” or in any form that resembles a bank deposit. Sources cited by journalist Eleanor Terrett say the restriction would apply broadly across digital asset service providers and affiliates, aiming to close loopholes and prevent any “economically or functionally” equivalent interest model. The draft keeps incentives alive, but only if they are activity-based rather than interest-based. Platforms could still use loyalty, promotion, or subscription-style programmes—so long as regulators judge them not to be “interest.” The SEC, CFTC, and the US Treasury are expected to jointly define what types of rewards qualify as permissible and how the rules will be enforced. Industry reactions are mixed. Some participants argue the standard (including “economic equivalence”) is vague and may give regulators room for strict interpretation, potentially limiting how rewards can be tied to balances or transaction volumes. Others say the proposal is close to expectations and could still allow transaction-based rewards while preventing stablecoins from operating like yield accounts. Bank representatives are set to review the text this week, following earlier versions such as the Tillis-Alsobrooks proposal, which reportedly would have been more restrictive. Overall, the CLARITY Act draft signals tighter oversight of stablecoin “interest-like” products, while preserving non-interest engagement incentives.