Senators Move to Ban Passive Stablecoin Yields as Crypto Bill Nears Showdown

TLDR

• Senators move to ban passive stablecoin yields and boost activity-based rewards.
• Draft bill adds key protections for non-custodial blockchain developers.
• Bipartisan backing grows for strict yield rules ahead of Senate markup.
• New framework reshapes stablecoin policy as regulators target passive returns.
• Crypto markets eye clarity as Congress advances sweeping digital asset rules.

U.S. senators advanced new rules that restrict stablecoin yield programs and set a clear policy path for digital assets. The draft bill bans passive stablecoin yield while permitting activity-linked rewards that support measurable engagement. The move signals a decisive shift as lawmakers prepare the bill for a key committee markup.

Stablecoin Restrictions Gain Bipartisan Backing

Senate leaders placed the passive stablecoin yield ban at the center of the updated framework, and they framed it as a structural safeguard. The draft bars digital asset platforms from paying stablecoin yield for balances held without activity, yet it still allows rewards tied to defined actions. The text aligns with a recent proposal that limited returns unless users traded, staked, or supplied collateral.

Banking groups argued that passive stablecoin yield programs create liquidity concerns, and they urged Congress to close remaining gaps. Crypto firms countered that the GENIUS Act already resolved this issue, but lawmakers still enforced new limits on stablecoin yield for account balances. However, exchanges can continue offering rewards when customers trigger transactions or provide liquidity.

Credit unions also supported ending passive stablecoin yield programs, and they joined banks in calling for tighter rules. Their position influenced the final draft, and it strengthened the case for a unified approach. As a result, senators presented a policy that keeps activity-based incentives while removing passive returns.

Developer Protections Added to the Framework

Lawmakers inserted new language that protects software developers who do not control user funds, and it mirrors earlier bipartisan work. The measure shields developers from treatment as financial intermediaries and affirms their role in non-custodial systems. Furthermore, the provision brings clarity to code maintenance and infrastructure support.

Senators Cynthia Lummis and Ron Wyden shaped these protections, and their language now appears in the Banking Committee draft. Their framework sets boundaries between code creation and regulated financial activity. Therefore, technical contributors gain a standard that limits exposure to compliance rules.

The update arrives as the broader bill moves toward a Thursday markup, and it resolves several pending disputes. Committees must later align this version with a separate Agriculture Committee proposal. After that step, negotiators will compare the bill with the House’s Digital Asset Market Clarity Act.

Market Impact and Legislative Path Ahead

Digital assets traded slightly higher as anticipation for the bill increased, and major tokens saw modest gains. Analysts said approval could reduce uncertainty, and they expect a stronger market response if the bill advances. Yet traders held positions steady while awaiting new inflation data.

Prediction markets now assign a high chance of enactment and they suggest strong momentum for federal action. Passage could lift market confidence, and it may influence demand for bitcoin and other assets. Still, the final bill must clear both chambers before reaching the president.

The Senate will decide how to merge the competing frameworks, and timing remains critical as negotiations continue. Any delay could shift the debate, but committee leaders aim to maintain progress. As the showdown approaches, the passive stablecoin yield ban remains the central policy shift.

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