The US Congress is closer than ever to setting federal rules for digital assets, but the question is whether that is even possible Stablecoins can provide yield It has slowed down the process more than agency fights or token classification.
Notably, the House of Representatives has already introduced the Digital Asset Market Clarity Act, which sets a path for some tokens to transition from securities regulation to oversight by the Commodity Futures Trading Commission (CFTC).
At the same time, the US Senate is drafting a parallel package that will divide responsibilities between the Agriculture and Banking Committees.
However, despite the large areas of agreement, negotiators say the issue of stablecoin returns remains the sticking point.
This debate concerns whether payment stablecoins should be able to pass through a portion of short-term treasury proceeds to users, either as outright interests or as promotional rewards offered by affiliates.
Democratic lawmakers argue that yield structures could accelerate deposit outflows from community banks and raise funding costs. At the same time, Republicans contend that limiting the yield would protect institutions at the expense of consumers.
So, what began as a question about technical rulemaking has become a broader discussion about the composition of the U.S. deposit base and the potential for digital dollars to compete with traditional bank accounts.
$6.6 trillion outflow scenario
The conversation turned in mid-August after Banking Policy Institute (BPI) He highlighted what he described as the gap in law of genius, The stablecoin law passed earlier this year.
The law prohibits issuers from paying interest but does not expressly prohibit exchanges or marketing affiliates from offering rewards tied to the issuer’s reserve assets.
According to BPI, this structure could allow stablecoin operators to offer cash-equivalent returns without obtaining a banking charter.
To highlight the concerns, the group cited government and central bank scenario analyzes that estimate that up to $6.6 trillion in deposits could move into stablecoins under loose-yield designs.
Analysts familiar with the modeling stress that this figure reflects a stress situation rather than expectations, and assumes high substitutability between traditional deposits and tokenized cash.
However, this issue has helped shape the debate. Senate aides say it has become a reference point in discussions about whether rewards programs constitute shadow deposit taking and whether Congress should adopt anti-evasion language covering affiliates, partners and artificial structures.
This concern is based on recent experiences. Deposit betas have remained low at many U.S. banks, with checking accounts often paying between 0.01% and 0.5% even though Treasury yields have been above 5% for most of the past year.
This gap reflects the economics of bank financing. In theory, stablecoin operators that hold reserves in short-term government securities could offer much higher returns while providing near-instant liquidity.
Given this, policymakers worry that this combination may pull money away from lenders who support domestic credit markets.
Narrow legal question
The yield question revolves around how Congress defines “interest,” “source,” and “subsidiary.”
Under the GENIUS Act, issuers must maintain reserves and meet custody and disclosure standards, but cannot pay interest on the tokens in circulation.
Legal analysts point out that an exchange or related entity offering a rewards program could create a structure in which users receive an economically similar value to the interest while remaining outside the legal definition.
However, banking trade groups urged lawmakers to clarify that any return flowing from reserve assets, whether distributed directly or through a separate entity, should fall under the interest ban.
Meanwhile, stakeholders in the cryptocurrency industry argue that such restrictions would put stablecoins at a competitive disadvantage compared to fintechs, which already offer rewards programs with a rough return.
They also point out that other jurisdictions, including the UK and EU, are creating pathways Token monetary instruments With different methods of determining wages.
For them, the policy question is how to support digital dollar innovation while maintaining prudential limits, not how to remove yield from the ecosystem entirely.
However, Democrats argue that the pace of cross-chain transfers creates a different dynamic than traditional banking competition.
Stablecoin balances can move quickly across platforms without settlement delays, and reward structures tied to treasury income can accelerate inflows during market stress. They cite research suggesting that moving deposits out of community banks would have the greatest impact on rural lending, small businesses and agricultural borrowers.
According to recent progress data reconnaissance65% of voters believe that widespread use of stablecoins would hurt local economies, a view reflected across party lines.
Other issues hamper the cryptocurrency bill
Meanwhile, stablecoin returns are not the only unsolved problem.
Democrats have proposed adding ethics provisions restricting officials and their families from issuing or profiting from digital assets while in office, as well as requirements to maintain full rosters of commissioners in office. Sick and enough Before delegating new supervisory authority.
They are also looking for clearer tools to address illicit financing of platforms that facilitate access for US persons, and a definition of decentralization that prevents entities from avoiding compliance obligations by labeling themselves as protocols.
These additions have narrowed the legislative path. Senate staff say a rate increase before the recess is now unlikely, raising the possibility that final negotiations will be extended into 2026.
In this case, the Genius Act’s ambiguity regarding rewards will remain, and the SEC and CFTC will continue to shape the digital asset market through enforcement and rulemaking actions.
