Senate GOP Unveils Crypto Bill With New Limits On Stablecoin Rewards
By CU Today Staff —
WASHINGTON— Senate Republicans unveiled the text of their long-awaited cryptocurrency market structure bill Wednesday, including new restrictions on stablecoin rewards that could have significant implications for banks, while setting the stage for a Senate vote before lawmakers leave for the August recess.
The legislation, known as the CLARITY Act, would establish the first comprehensive federal regulatory framework for digital assets, according to Reuters.
One of the bill's most closely watched provisions would prohibit rewards on idle balances of dollar-backed stablecoins when those rewards resemble interest paid on bank deposits, while allowing incentives tied to transaction activity, such as payments made with stablecoins. Reuters reported the Securities and Exchange Commission, Commodity Futures Trading Commission and Treasury Department would jointly develop rules implementing the provision. Banks have argued stablecoin rewards could draw deposits away from the traditional banking system, while crypto firms contend restricting exchanges from offering such rewards would stifle competition.
The legislation would also significantly expand anti-money laundering requirements for the cryptocurrency industry by classifying digital commodity exchanges, brokers and dealers as financial institutions under the Bank Secrecy Act. Reuters reported the move would require crypto firms to comply with anti-money laundering, customer identification and due diligence requirements similar to those already imposed on banks.
The proposal would create a new fundraising exemption allowing cryptocurrency companies to raise up to $50 million annually, and $200 million in total, without registering offerings with the SEC. Reuters said the provision would reduce the regulatory burden for certain token sales and narrow the SEC's ability to argue that many digital asset offerings constitute illegal securities sales.
For decentralized finance platforms, the bill establishes standards defining when a platform is sufficiently decentralized to avoid bank-style compliance obligations. Platforms able to block users or retain special administrative privileges would not qualify as decentralized and instead would be required to monitor transactions and report suspicious activity, according to Reuters.
The legislation also addresses tokenization, clarifying that placing traditional securities such as stocks or bonds on a blockchain does not exempt them from existing securities laws. Reuters reported the bill would require the SEC to study tokenized securities further while generally treating tokenized assets the same as the underlying securities they represent for regulatory purposes.
Senate Republicans also included an ethics provision prohibiting the president, vice president and certain members of Congress from issuing or sponsoring digital assets through January 2029. Reuters reported the measure is intended to address concerns over public officials profiting from cryptocurrency ventures, although disagreements over enforcement remain. The bill will need support from at least eight Senate Democrats to overcome the chamber's 60-vote threshold.
The Defense Credit Union Council applauded Congress for continuing to advance a comprehensive framework for digital assets that promotes innovation while protecting consumers and preserving the safety and soundness of the financial system.
"As lawmakers finalize the CLARITY Act, it is essential that America’s nearly 146 million credit union members are afforded the same opportunities to access responsible digital asset services as customers of banks and other financial institutions. Innovation should never depend on an institution’s charter," stated DCUC Chief Advocacy Officer Jason Stverak. "For defense credit unions, this issue is about far more than technology. Servicemembers, veterans, and military families increasingly rely on secure, fast, and reliable financial services regardless of where duty takes them. Whether deployed overseas, stationed in remote locations, or supporting missions around the world, they deserve access to modern payment systems and digital financial products through the trusted, member-owned institutions they already rely upon."
Stverak said DCUC strongly supports maintaining explicit authority for federally insured credit unions to engage in permissible digital asset activities under the supervision of the National Credit Union Administration.
"The final legislation should clearly recognize the NCUA as the primary prudential regulator for credit unions, ensure parity with federal banking regulators, and provide the certainty needed for credit unions to responsibly innovate," he stated. "Congress should also ensure that Credit Union Service Organizations can participate in delivering digital asset services, establish practical and risk-based custody standards, and provide a realistic implementation period that allows institutions of every size to safely adopt new technologies. Community-based financial institutions should not face unnecessary regulatory barriers that effectively limit competition."
At the same time, strong consumer protections remain paramount, emphasized Stverak.
"Digital assets held in custody should be clearly segregated, subject to robust cybersecurity and operational safeguards, and accompanied by transparent disclosures so consumers understand that these assets are distinct from federally insured credit union shares," he said. "DCUC also remains concerned with proposals that would permit widespread yield-bearing payment stablecoins without appropriate safeguards. Congress must carefully balance innovation with the need to preserve the deposit funding that supports lending to consumers, small businesses, and military communities across America."
Originally reported by CU Today.