Stablecoin Yield Debate Stalls U.S. Senate Crypto Market Structure Bill

The debate over stablecoin yields has become a central obstacle in the U.S. Senate’s ongoing negotiations over crypto market structure legislation. Tensions escalated this week after a White House meeting between Wall Street banking leaders and crypto industry executives failed to produce a compromise. At the heart of the dispute is whether stablecoin issuers should be allowed to offer rewards or yield to users.

Banking representatives remain firm in their opposition, arguing that any form of stablecoin yield could undermine traditional deposit-taking institutions and threaten the stability of the U.S. banking system. In a policy document titled “Yield and Interest Prohibition Principles,” banks reiterated their stance that stablecoin rewards resembling interest payments should be prohibited outright.

In response, the Digital Chamber circulated its own framework defending limited reward mechanisms under the Senate Banking Committee’s draft of the Digital Asset Market Clarity Act. The group supports prohibiting interest-like payments on idle stablecoin holdings, which closely resemble savings accounts. However, it argues that rewards tied to user activity, such as liquidity provision and ecosystem participation in decentralized finance (DeFi), should remain permissible.

The Digital Chamber also signaled openness to a proposed two-year study examining stablecoins’ impact on bank deposits, provided it does not automatically trigger new regulations. According to CEO Cody Carbone, the crypto industry’s willingness to forgo passive yield represents a meaningful compromise, particularly given that the GENIUS Act—last year’s stablecoin law—already allows certain reward structures.

The White House has reportedly pushed for a resolution before month’s end, with further discussions expected. While the Senate Agriculture Committee has advanced its version of the bill, the Banking Committee remains divided. Any final crypto market structure bill will require bipartisan backing to meet the Senate’s 60-vote threshold, making consensus on stablecoin regulation critical for progress.