Senators Advance Stablecoin Crackdown With Yield Ban in Draft Bill

U.S. lawmakers are taking decisive action to reshape cryptocurrency regulation, with a new bipartisan bill targeting passive stablecoin yields. The draft legislation explicitly bans yield programs for idle stablecoin holdings while permitting rewards tied to verifiable on-chain activity like trading or staking.

Banking groups have long warned that passive yield mechanisms create systemic risks, echoing concerns from the SEC about unregistered securities offerings. Crypto advocates counter that activity-based rewards align with existing frameworks like the GENIUS Act, but senators appear determined to draw clearer boundaries.

The bill also introduces safeguards for non-custodial developers, reflecting growing recognition of decentralized finance's structural differences from traditional finance. This comes as global regulators increasingly scrutinize stablecoins' role in both payments and speculative markets.

Market observers note the proposal could accelerate institutional adoption by providing regulatory certainty, though some warn it may temporarily dampen yield-seeking capital flows. Major stablecoins like DAI and USDC face potential operational adjustments, while activity-focused protocols may gain advantage.