New Breakthrough in US Senate Cryptocurrency Legislation: Stablecoin Interest Rules to Be Rewritten

The U.S. Senate has recently made significant progress in legislative negotiations regarding cryptocurrency market regulation. The latest bipartisan bill draft released by Senate Banking Committee Chairman Tim Scott indicates that in the future, users who merely hold stablecoins in their accounts without engaging in any operations will be prohibited from earning any form of interest or rewards. This negotiated version of the Cryptocurrency Market Structure Act lays the foundation for this week’s committee review.

This new regulation marks a clearer stance by federal regulators on cryptocurrency oversight. The move aims to distinguish between “active earnings” and “passive rewards,” a distinction that is becoming a critical dividing line for future cryptocurrency industry regulation.

New Regulations on Stablecoin Yields: Behavior-Linked Rewards as a Key

According to the bill, digital asset service providers are prohibited from paying interest or any form of rewards to users who “only hold payment stablecoins.” However, if the interest or rewards are directly linked to specific user actions, such as trading, staking, providing liquidity, or collateralizing, they are not subject to this prohibition. This means exchanges can still offer incentives tied to actual operations.

This provision reflects a compromise proposed by Democratic Senator Angela Alsobrooks. As one of the key negotiators of the bill, Alsobrooks advocates for establishing clear regulatory boundaries while maintaining operational flexibility for the crypto industry. Her plan has garnered bipartisan support and is seen as a way to curb the “interest-free profit” phenomenon feared by banks, without overly restricting innovation.

Intense Battles Between Banks and Exchanges

The issue of stablecoin yields has long troubled U.S. financial regulators. Banks argue that although the GENIUS Act passed in July 2025 prohibits stablecoin issuers from paying direct interest, it contains obvious loopholes—namely, it does not effectively restrict major trading platforms like Coinbase from offering reward programs to users.

Conversely, crypto companies insist that this issue was thoroughly discussed and addressed during previous GENIUS Act negotiations. They accuse banks of using the guise of “regulatory improvement” to limit the competitiveness of crypto exchanges. Coinbase has even issued a clear warning that if the new bill excessively restricts the flexibility of reward programs, the company will withdraw support for the entire legislation. This stance reflects exchanges’ deep concerns about overregulation.

Developer Protection Provisions: A Balance for the Crypto Industry

The new draft includes key provisions proposed by Senators Cynthia Lummis and Ron Wyden. These provisions exclude software developers and infrastructure providers—including miners and node operators—from the definition of “financial intermediaries.” This ensures that these participants are not burdened with excessive compliance obligations simply for writing open-source code or maintaining infrastructure.

This exemption is seen as a protective measure for the technical aspects of the crypto industry, encouraging innovation and decentralization while avoiding overregulation that could stifle the ecosystem.

Political Considerations: Why Ethical Clauses Were Not Included

Notably, the new bill does not include “conflict of interest” restrictions related to President Trump and his family’s cryptocurrency ventures. According to Bloomberg estimates, Trump’s family has profited approximately $620 million through projects like World Liberty Financial. Some Democratic lawmakers strongly advocated for such ethical restrictions, but moderate Senate members like Ruben Gallego warned that overly aggressive moral clauses could cause the entire bill to collapse during negotiations.

Ultimately, the negotiators adopted a pragmatic approach, prioritizing the establishment of a cryptocurrency regulatory framework and temporarily setting aside ethical issues.

Next Steps in Legislation and Coordination Challenges

Currently, the Senate Banking Committee is scheduled to hold formal hearings this week. Meanwhile, the Senate Agriculture Committee has postponed its related hearings to the end of the month, indicating ongoing efforts to gather diverse opinions. The two versions from the Banking and Agriculture Committees will need to be reconciled before being submitted for a full Senate vote.

Additionally, lawmakers face challenges in the House of Representatives. The House already passed its own version of the Digital Asset Market Clarity Act in summer 2025. The final cryptocurrency legislation must be approved by both chambers and then signed by President Trump to become law.

This means the path to federal cryptocurrency regulation remains lengthy, involving coordination within the Senate, between the two chambers, and with the President. However, the recent progress in the Senate indicates that establishing a unified cryptocurrency market regulatory framework has become a priority for U.S. financial regulators.