Crypto industry insiders got their first look at the revised market structure bill in the Senate, and the opening impression was that the language on the stablecoin dividend allowed was far too narrow and unclear, according to a person familiar with the current draft.
The new language, announced Friday by Senators Angela Alsobrooks and Thom Tillis, would ban dividend payments for simply holding a stablecoin. It would also limit any approach that makes the program in any way equivalent to a bank deposit, and it applies additional limits to other potentially permitted activities, the person said, adding that the mechanics of determining activity-based stablecoin rewards are left uncertain.
The crypto industry got its first look at the revised section of the Digital Asset Market Clarity Act on Monday in a closed-door hearing on Capitol Hill in Washington, representing an attempt to clear a roadblock in efforts to get a Senate Banking Committee hearing. Bankers had insisted that stablecoin rewards are not similar to interest-bearing bank deposits because they argued that the competing product could hamper the industry and stifle lending. So the compromise will allow reward programs on users’ stablecoin activities, but not balances.
A similar version of the Clarity Act passed the House of Representatives last year, and another version cleared a markup hearing in the Senate Agriculture Committee. The banking panel represents a major step that would get the legislation to a place where lawmakers could prepare a final, combined version that would get a vote in the full Senate.
The stablecoin dividend lobbying battle between the crypto sector and the banking industry had stifled legislative progress for quite some time. But that is not the only problem. The industry still needs to see the final approach to oversight of the decentralized finance (DeFi) space, which had remained a sticking point for Democrats who had wanted to ensure illegal financial protections. And Democrats have also insisted on a need for a ban on high-ranking officials who personally benefit from the crypto industry — a provision aimed squarely at President Donald Trump.
Although the industry scored a huge victory last year when the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act became the first major US law to regulate a segment of the crypto industry, it was meant to be the minor first step in a one-two policy approach culminating in the Clarity Act.
The full-fledged arrival of crypto into the US financial system will eliminate regulatory uncertainty for any investor who has been hesitant to get involved in the sector. Digital asset insiders believe that will open the floodgates among institutional investors and developers looking to build on top of the technology.
