Senate Push Stablecoin Compromise and DeFi Oversight in Crypto Bill

TLDR

• Senate bill restricts interest payments on stablecoins held by digital asset providers
• DeFi oversight appears for the first time in a Senate crypto market bill
• New rules exclude network tokens like SOL and LINK from being securities
• Lawmakers can file amendments to the 278-page draft bill until Tuesday night

The U.S. Senate has released a new draft bill that could shape the future of cryptocurrency regulation, focusing on stablecoin yields, DeFi oversight, and agency authority. The bipartisan effort outlines clearer rules for stablecoins and digital asset platforms while introducing protections for developers in decentralized finance.

Stablecoin Rewards Restrictions Draw Industry Attention

The draft legislation, titled the Digital Asset Market Clarity Act, introduces a key restriction on stablecoin rewards. It states that digital asset service providers cannot pay yield or interest “solely in connection with the holding of a payment stablecoin.” However, rewards connected to activities such as transactions are allowed under the bill.

This part of the bill represents a compromise reached after weeks of debate between lawmakers, banks, and crypto companies.

Democratic Senator Angela Alsobrooks proposed a middle-ground approach to preserve the traditional deposit-based model used by community banks. According to a source close to the negotiations, companies like Coinbase viewed this compromise as a productive way to move forward.

DeFi Recognized with Separate Oversight Category

For the first time, decentralized finance (DeFi) appears in its own oversight section in a Senate crypto market structure bill. The language suggests that DeFi is being treated as a separate category, which was not the case in previous drafts.

The bill incorporates parts of the Blockchain Regulatory Certainty Act, introduced earlier by Senators Cynthia Lummis and Ron Wyden.

While developers in the DeFi space had initially expressed concern that protections might be reduced, some safeguards remain in the draft. Industry sources say the updated language does not erase developer protections, though these are seen as weaker than those in previous proposals.

Ancillary Assets and Network Tokens Definitions Refined

The draft reintroduces the term “ancillary asset,” used to describe some digital assets not classified as securities. This term had appeared in earlier Senate versions but was not included in the House version, which may result in negotiations between both chambers.

The bill also says that network tokens, including those in exchange-traded funds (ETFs), will not be treated as ancillary assets or securities.

This would apply to cryptocurrencies like Solana (SOL), XRP, and Chainlink’s LINK, which are included in ETFs. This classification could affect how federal regulators approach enforcement and compliance.

Bill Advances Amid Tight Deadlines and Ongoing Negotiations

The draft was released just after midnight by Senate Banking Committee Chairman Tim Scott, starting a short countdown for lawmakers to review and propose amendments. Senators must submit any changes by Tuesday evening, ahead of the committee’s markup hearing scheduled for Thursday.

In a letter to Chairman Scott, Senators Jack Reed, Tina Smith, and Chris Van Hollen requested more time for review.

Meanwhile, the Senate Agriculture Committee postponed its own markup of similar legislation. Both committees must advance their versions before the bill can reach the full Senate for consideration. The current draft may continue to change before final votes are held.

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