US Senate Nears Landmark Stablecoin Legislation: No Interest for Idle Funds

A significant breakthrough has been reached in the US Senate’s legislative negotiations concerning the structure of the cryptocurrency market. According to a newly released bipartisan draft on Monday, users who merely hold stablecoins “idly” in their accounts will be prohibited from earning any form of interest or rewards.

This “Negotiated Crypto Market Structure Bill,” unveiled by Senate Banking Committee Chairman Tim Scott, aims to resolve weeks of contention between cryptocurrency firms and the banking sector. Its release paves the way for a crucial committee review scheduled for Thursday, October 15th.

Key Provisions: Redefining Stablecoin Yield

Under the proposed legislation, digital asset service providers would be explicitly forbidden from paying any form of interest or yield to users who are “merely holding payment stablecoins.” However, the draft makes a critical distinction: rewards or incentives directly tied to specific actions, such as trading, staking, providing liquidity, or collateralization, would remain permissible.

This new clause reflects a compromise brokered last week by Democratic Senator Angela Alsobrooks, a key negotiator on the bill. Senator Alsobrooks advocated for establishing clear regulatory boundaries while preserving operational flexibility for the industry. Her proposal allows cryptocurrency exchanges to offer stablecoin yield only when users engage in “specific actions,” such as selling stablecoins or participating in related operations, but strictly prohibits compensation for funds simply resting in an account.

The Heated Debate Over Stablecoin Rewards

The issue of stablecoin yield has long been a contentious point within the American financial landscape. The banking sector argues that while the GENIUS Act, which passed in July 2025, prohibited direct interest payments by issuers, it left loopholes that did not restrict platforms like Coinbase from offering rewards to users.

Conversely, cryptocurrency companies maintain that this issue was already addressed during the GENIUS Act negotiations and accuse banks of attempting to stifle competition. Coinbase, a prominent crypto exchange, has even warned it would withdraw its support for the overall bill if the legislation overly restricts reward programs.

Broader Implications: Developers and Ethics

Significantly, the new draft also incorporates proposals from Senators Cynthia Lummis and Ron Wyden. This crucial clause seeks to exclude software developers and infrastructure providers (such as miners or node operators) from being classified as “financial intermediaries.” This provision aims to ensure they do not incur compliance obligations simply for writing open-source code.

However, the bill notably omits an “ethics clause” targeting President Donald Trump and his family’s cryptocurrency ventures. Bloomberg estimates that the Trump family has profited approximately $620 million through projects like World Liberty Financial. While some Democrats strongly lobbied for the inclusion of conflict-of-interest restrictions, moderate members of the party, such as Ruben Gallego, cautioned that overly aggressive ethics clauses could jeopardize the entire bill’s passage.

The Road Ahead for Crypto Legislation

Overall, this amended draft is widely seen as a vital step forward in advancing the legislation, setting the stage for the Senate Banking Committee’s formal review on Thursday.

Meanwhile, the Senate Agriculture Committee has postponed its related hearing, originally scheduled for Thursday, until the end of the month, citing the need for more time to consolidate feedback and opinions. Ultimately, both the Banking Committee’s version and the Agriculture Committee’s version of the bill will need to be reconciled before it can proceed to a full Senate vote.

Beyond the Senate, legislators must also contend with the House of Representatives’ version, the “Digital Asset Market Clarity Act,” which passed the House last summer. For the final bill to become law, it must successfully navigate both chambers and then be sent to President Donald Trump for his signature.