The U.S. Senate Banking Committee has released a revised draft of its long awaited crypto market structure legislation, offering new clarity on stablecoin rewards while outlining protections for decentralized finance developers. The 278 page proposal reflects months of negotiations between lawmakers, regulators, banks, and the crypto industry, and is expected to be debated in a formal committee hearing later this week. The bill seeks to establish how federal agencies such as the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission would divide oversight of digital asset markets. While the legislation addresses many unresolved regulatory questions, it notably avoids provisions related to ethics concerns raised by some lawmakers about public officials holding financial ties to crypto businesses while in office, an omission that could draw scrutiny as debate continues.
A central feature of the updated draft is a compromise on stablecoin rewards, an issue that has stalled progress in recent weeks. The bill prohibits digital asset service providers from paying interest or yield that is solely tied to holding payment stablecoins, aligning with concerns raised by banking groups about competition with deposits. At the same time, it allows activity based incentives linked to transactions or usage, preserving flexibility for payment focused stablecoin models. This language mirrors earlier compromise proposals floated during negotiations and is viewed by some industry participants as a workable middle ground. The definition of digital asset service providers follows terminology established under the GENIUS Act, covering exchanges, custodians, and issuers. Critics argue the wording could still be interpreted broadly, while supporters say it provides needed guardrails without freezing innovation.
Beyond stablecoins, the bill introduces new concepts for securities classification and decentralized finance oversight. It retains the Senate’s “ancillary asset” framework while clarifying that certain network tokens would not be treated as securities, including assets already included in exchange traded funds. The draft also incorporates elements of the Blockchain Regulatory Certainty Act, offering conditional protections for DeFi developers who do not control user funds or protocols. Senators Cynthia Lummis and Tim Scott have championed these provisions as a way to balance innovation with accountability. As amendments are filed and hearings approach, the bill is emerging as one of the most consequential crypto policy efforts to date.
