New CLARITY Act Draft Clears Way for Stablecoin Usage Incentives

TLDR

• The new CLARITY Act draft allows crypto companies to offer rewards based on stablecoin usage.
• The bill makes it clear that stablecoin rewards for activities like payments and transfers are permitted.
• Passive interest or yield on simply holding a stablecoin remains prohibited under the draft.
• Rewards for participation in governance, staking and liquidity provision are allowed.
• The bill states that these activity-based rewards do not turn stablecoins into securities or deposit products.

A new draft of the CLARITY Act permits stablecoin-related rewards tied to user activity, excluding passive yield or interest payments. Released by Senate Banking Chair Tim Scott, the bill outlines when crypto firms can offer incentives without breaching federal laws. The Digital Asset Market Clarity Act clarifies which reward types do not reclassify a stablecoin as a security or a bank product.

CLARITY Act Draft Supports Stablecoin Use Rewards

The CLARITY Act draft allows crypto companies to issue rewards based on stablecoin usage, such as transactions or wallet activity. These rewards can be linked to transfers, remittances, settlements, payments, or broader platform participation. Loyalty programs, rebates, and promotional incentives also fall under the approved categories in the legislation.

The bill states that these forms of value do not convert stablecoins into deposit-like or security-classified instruments. However, the draft makes clear that passive interest or yield on just holding stablecoins is not allowed. The legislation focuses strictly on incentives for actions, not rewards for static balances.

Crypto industry advocates have pushed for clear guidelines that separate everyday user rewards from regulated financial products. The new language in the bill reflects concerns raised across both political parties. “This bill reflects months of serious work,” Tim Scott said in a statement shared by Cointelegraph.

Expanded Permissions for Crypto-Native Ecosystem Activities

The draft law also permits stablecoin rewards tied to broader crypto ecosystem participation. This includes governance engagement, staking, liquidity provision, and platform validation activities. These actions are recognized as contributing to network health and user engagement.

The draft does not treat these types of participation-based rewards as regulated banking activities. It separates them from traditional financial products that typically involve interest payments or custodial services. Lawmakers specify that rewards must arise from user contributions, not merely possession.

The draft reaffirms that stablecoin issuers cannot offer any yield solely for holding a token, regardless of format. It bars payments in cash, tokens, or other forms if they stem only from account balances. This distinction aims to prevent confusion between decentralized incentives and traditional bank yields.

Crypto trade groups have expressed support for the structure. They argue the policy maintains innovation while addressing consumer clarity. The bill responds to earlier regulatory pushback on unregulated yield-bearing products.

Banking Industry Pushback and Legislative Timeline

Banking organizations have raised concerns about the implications of crypto-linked reward programs. They claim these incentives compete with community bank deposit services. In a letter, they warned the programs could divert billions from traditional lenders.

Community bankers urged Congress to revise the GENIUS Act, arguing crypto firms exploit regulatory loopholes. They say stablecoin issuers pass rewards to holders via third parties like exchanges. According to them, these arrangements undercut regulated banking systems.

In response, crypto advocacy groups disputed the claims in a joint letter to the Senate Banking Committee. They stated, “payment stablecoins are not used to fund loans.” The Blockchain Association and Crypto Council emphasized the need for user choice and innovation.

Meanwhile, the Senate Agriculture Committee postponed its markup of the crypto market structure bill. Chairman John Boozman said members need more time to secure bipartisan agreement. The revised timeline now places the markup in the final week of January.

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