New US Proposal Seeks to Restrict Stablecoin Yield and Rewards

A significant development in the world of cryptocurrencies has emerged as a new U.S. proposal seeks to restrict stablecoin yield and rewards.

The draft law, which is currently under review by bank representatives, proposes to block interest-like returns on stablecoins while allowing limited user incentives.

According to the proposal, platforms would be prevented from offering yield for holding stablecoins directly or indirectly. This rule would apply to exchanges, brokers, and their affiliated entities, with regulators seeking to prevent workarounds.

The proposed regulation also bans any rewards considered 'economically equivalent' to interest, meaning stablecoins cannot function like savings accounts.

However, the draft allows activity-based rewards tied to user engagement, which may include loyalty programs, promotional campaigns, or subscription-style benefits. The key condition is that these incentives must not behave like interest payments.

The proposal assigns the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Treasury Department to jointly define allowed reward models within one year.

Crypto industry leaders have expressed mixed reactions to the proposal, with some viewing it as more restrictive than expected while others see it as a reasonable middle ground that protects users while preserving promotional and activity-based rewards.