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🚨NEW: New details are emerging about the latest legislative text outlining a compromise on stablecoin yield and rewards, along with early reactions from crypto industry leaders who reviewed it today. According to an internal stakeholder email shared with me, the proposal would prohibit platforms from offering yield “directly or indirectly” for holding a stablecoin or in a manner that resembles a bank deposit. The restriction would apply broadly to digital asset service providers (exchanges, brokers, etc.) and their affiliates to limit workarounds, and would bar anything “economically or functionally equivalent” to interest. The proposal would also permit activity-based rewards tied to user activity, including loyalty, promotional, or subscription programs, provided they are not deemed economically or functionally equivalent to interest. It would also direct the @SECGov, @CFTC, and @USTreasury to jointly define permissible rewards and establish anti-evasion rules within one year. One industry leader who reviewed the text today tells me the draft is a “departure” from what had been previously discussed with the White House, warning the “economic equivalence” standard is vague and could be interpreted more restrictively by future regulators. They also point to limits on tying rewards to balances or transaction amounts, which could make incentives difficult to structure. “Overall, this is a more narrow and restrictive approach toward crypto,” they said. Another says the text is “largely in line with expectations” and reflects a balanced outcome, preserving transaction-based incentives while making clear stablecoins cannot function like interest-bearing deposit accounts. “This is the best possible result,” they said, noting that the text is broader than the initial Tillis-Alsobrooks proposal, which would have been more restrictive on crypto. Up next: Bank reps are set to review the text tomorrow.

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