New Senate Bill Enables Activity-Based Rewards for Stablecoin Users

A New Bill in the U.S. Senate Proposes Rewards for Stablecoin Users

A revised bill titled the Digital Asset Markets Clarification Act allows cryptocurrency companies to offer activity-based rewards to stablecoin users. The proposal states that certain incentives and rewards related to the use of stablecoins are permitted without considering their offering as securities or banking products.

"Families and small businesses benefit from clear rules," stated Senate Banking Committee Chairman Tim Scott in a press release. "This proposal reflects months of serious work and concerns raised within the Committee, providing Americans with the protections and certainty they deserve," he added.

Rewards for stablecoins have become a major point of contention between cryptocurrency companies and banking groups. The latter argue that yield-generating stablecoin products resemble unregulated investment vehicles. In contrast, cryptocurrency companies contend that such programs operate more like loyalty points.

Exemptions for Financial Activity-Related Rewards

The bill stipulates that the prohibition does not apply to incentives linked to everyday financial activities, including rewards for payments, transfers, and the use of blockchain platforms. Additionally, loyalty programs, subscription-based incentives, and discounts related to the use of stablecoins are covered.

The exemption also extends to specific cryptocurrency activities. According to the text, rewards for providing liquidity or collateral, as well as participation in governance and validation, are permitted.

Concerns and Reactions from Community Banks

Last week, a group of community bankers in the U.S. urged Congress to amend the GENIUS Act, arguing that stablecoin issuers exploit a loophole that allows them to offer indirect yields via exchanges. They warned that the proposed reward programs from cryptocurrency exchanges could siphon billions of dollars from community banks, undermining their capacity to provide loans to small businesses and other categories.