After months of intense bipartisan negotiations, the full text of the 278-page Senate Virtual Asset Market Structure bill has been released. This marks a critical turning point for US crypto regulation.
While headlines have largely focused on its DeFi provisions and token classification, a more subtle change may have gone unnoticed.
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US Senate Crypto Bill Restricts Stable Yields, Favors Banks in 278-Page Draft
The bill could tip the scales in favor of traditional banks by limiting passive returns from stablecoins.
The latest draft clarifies that businesses cannot pay interest just to hold stable balances. Instead, rewards are only allowed when tied to active account usage. This means:
- Staking
- Liquidity provision
- Transactions
- Publication of guarantees, or
- Participate in network governance.
Concretely, individual users who previously obtained passive returns similar to those of bank deposits may now face obstacles. Meanwhile, banks retain their traditional ability to pay interest on deposits.
“The banks may have won this round thanks to the stable yield of the coins,” noted Eleanor Terrett, host of Crypto in America, highlighting the provision on page 189 of the draft.
The timing adds to the urgency. Senators have just 48 hours to offer amendments before Thursday’s markup, leaving the final form uncertain.
If the provision remains unchanged, it could limit the appeal of crypto platforms to retail investors while incentivizing them to turn to DeFi activities or banking alternatives.
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Simply put, this approach risks stifling innovation if it does not address systemic issues such as legacy stablecoin withdrawals that originally motivated yield offerings.
Token Clarity and DeFi Guardrails: How the Bill Balances Innovation and Oversight
Beyond yield rules, the bill addresses the broader market structure, token classification, and oversight of DeFi. Notably, it treats tokens like
The legislation also incorporates compromise language that protects software developers and alleviates regulatory arbitrage issues between DeFi and TradFi, a sticking point that had previously frustrated industry and banking players.
DeFi protocols, as outlined in the draft notes, must operate within defined limits to avoid loopholes that could undermine securities and commodities laws. At the same time, non-controlling developers are shielded from undue liability.
Senator Cynthia Lummis, a leading cryptocurrency advocate, called the release a major milestone.
“The Digital Asset Market Clarity Act will provide the clarity needed to sustain innovation in the United States and protect consumers,” she said, urging her colleagues not to back down from bipartisan progress ahead of the Banking Committee’s markup.
The bill, which builds on previous efforts such as the Lummis-Gillibrand framework, represents more than a regulatory roadmap. This could quietly recalibrate the US crypto ecosystem.
By limiting passive returns from stablecoins, the project subtly preserves the traditional banking model while simultaneously encouraging more active engagement in DeFi and network governance.
This trade-off could shape individual user behavior and competitive dynamics between crypto platforms and banks in the future.
