Senate crypto bill blocks stablecoin interest, allows bank trading, lending

The draft Senate crypto market structure bill would bar paying interest or yield solely for holding payment stablecoins, while also opening the door for banks and their affiliates to trade, lend, and otherwise deal in digital assets far more broadly.​

Stablecoin interest ban

• The Banking Committee’s draft, tied to the “Digital Asset Market Clarity Act” package, includes a section on “Preserving Rewards for Stablecoin Holdings” that prohibits digital-asset service providers from paying any form of interest or yield “solely in connection with the holding of a payment stablecoin.”​

• This language responds to banking-sector lobbying after the 2025 GENIUS Act, which already barred stablecoin issuers from paying interest but left room for exchanges and affiliates to offer yield-like rewards on stablecoin balances.​

What rewards are still allowed?

• The text tries to allow “activity-based” rewards, meaning perks tied to using stablecoins (e.g., transactions, memberships, or loyalty programs) rather than simply parking them and earning a passive rate.​

• Critics say the wording, especially the “solely” qualifier, leaves loopholes: firms could design minimal activity requirements so that de facto interest on balances looks like a usage reward instead of a simple yield.​

Expanded bank trading and lending

• A dedicated section of the bill spells out that banks and financial holding companies may engage in a wide range of digital-asset activities, as long as they follow standard safety-and-soundness and risk-management rules.​

• For larger financial holding companies, the draft would even permit certain proprietary trading in crypto, effectively softening earlier Volcker-style limits when the positions are in digital assets rather than traditional securities.​

Why banks pushed for this structure

• Community and larger banks argued that interest-bearing stablecoins could siphon trillions in deposits from insured banks into crypto platforms, weakening traditional credit creation for households and businesses.​

• By banning passive stablecoin yield while broadening banks’ own ability to trade and lend in digital assets, the bill effectively tries to keep deposit-like products inside the regulated banking system, while still letting banks participate in crypto markets as intermediaries and investors.​