(Bloomberg) -- Banking groups are floating last-minute changes to a compromise on stablecoin yield as a key Senate panel begins considering a landmark digital asset bill.
The proposed changes would tweak the compromise brokered by Senators Thom Tillis, a Republican, and Angela Alsobrooks, a Democrat, on stablecoin rewards earlier this month in the hopes of moving forward legislation long sought by the crypto industry to create clear rules for the digital asset space.
A set of banking advocacy groups, including the American Banking Association and the Consumer Bankers Association, released text on Friday that would completely limit stablecoin issuers from providing any rewards on the asset. Under the terms of the compromise, companies could provide rewards when a customer actively uses stablecoin. The crypto lobby had originally hoped that they could pass on rewards to customers for keeping stablecoin in an account.
In a letter accompanying the proposed text, the group of six bank lobbying groups wrote that the language proposed by the senators “includes exceptions that will enable evasion of the intended prohibition and incentive customers to hold and grow stablecoin balances at the expense of deposits.”
The crypto industry originally hoped to pass the legislation last summer, with President Donald Trump’s blessing, but faced hurdles from the bank lobby. The Senate Banking Committee’s decision to schedule a markup for next week suggests there is some fresh momentum.
Crypto advocates were quick to jump on the banking group’s proposed language, calling the industry “anti-competitive.” Yield on stablecoins has been one of the major sticking point in the negotiations to finally pass legislation that would create clear regulation for digital assets.
Paul Grewal, chief legal officer for Coinbase, wrote on X that the proposed language is not a “narrow fix” and instead designed by the banking lobby for “killing competition.”
“For months, their target was yields ‘equivalent’ to interest-bearing bank accounts. Now it’s transaction-based rewards, loyalty incentives, and other consumer benefits tied to blockchains,” Grewal wrote. “Enough already.”
A spokesperson for Alsobrooks referred Bloomberg to a statement from both senators earlier in the week, saying that they disagree with the position of the bank lobby on the proposed yield language in the bill. Tillis’s office and Senate Banking Chairman Tim Scott’s office did not respond to requests for comment.
“Our compromise also allows crypto companies to offer other forms of customer rewards,” Alsobrooks and Tillis wrote in the statement. “Most importantly, it helps put us on a bipartisan path to pass the CLARITY Act, providing the regulatory certainty needed to foster innovation. Some in the banking industry may not want either of these things to happen, and we respectfully agree to disagree.”
--With assistance from Lydia Beyoud.
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