Crypto bill edges toward yield compromise as broader risks persist

Stablecoin rewards remain central to the negotiations

The stablecoin rewards debate has centered on how lawmakers should handle incentives tied to dollar-pegged tokens. The GENIUS Act, passed last year, bars stablecoin issuers from paying interest directly to holders, but it does not prohibit platforms such as Coinbase from offering rewards.

That distinction has drawn opposition from banking industry representatives, who argue that allowing rewards could pull deposits away from traditional banks and harm community institutions. Crypto companies have argued that restricting rewards would curb innovation. The White House held multiple meetings on the issue as Tillis and Alsobrooks continued drafting language ahead of a Senate Banking Committee markup process.

The bill’s path has already shown signs of strain. A Senate Banking Committee markup planned for January was pulled at the last minute after Coinbase withdrew support. Sen. Cynthia Lummis had pushed for an April vote, but Tillis said earlier in the week that he did not expect the committee to hold a markup in April.

Another timing marker came from Tillis in comments reported Tuesday, when he said the Senate Banking Committee was unlikely to vote on the Clarity Act until May at the earliest. That delay leaves a narrowing window for the legislation as floor time tightens.

TD Cowen outlines five hurdles beyond the yield issue

A separate analysis from TD Cowen said the stablecoin yield dispute is still a key sticking point, but argued that five other issues could also derail the Clarity Act.

Seiberg, managing director at TD Cowen’s Washington Research Group, said the staffing problem at the CFTC could be resolved but not quickly. He said nominating and confirming additional commissioners could take months and that the process would need to begin within the next four to six weeks because he sees a late July deadline for action before the August congressional recess.

Seiberg also warned that prediction markets could fracture Democratic support if lawmakers try to fold that issue into the bill. “Just the offering on a prediction markets amendment could drive Democrats away from the bill,” he said.

He separately pointed to anti-money laundering risks tied to Iran’s reported acceptance of crypto payments. Seiberg said Iran had reportedly discussed requiring ships to pay tolls in crypto to pass through the Strait of Hormuz. He said that dynamic could produce a politically difficult amendment fight, writing: “For instance, we could see a Democrat offer an amendment in response that becomes politically difficult to stop even if crypto platforms see it as poison pill designed to kill the bill.”

Seiberg said another obstacle is the Trump family-linked World Liberty Financial project, which has drawn attention over restrictions preventing early investors from selling tokens until after Trump’s term ends. He also said Durbin and Marshall are expected to try attaching the Credit Card Competition Act to the crypto legislation. “We do not expect it to pass though if we are wrong it could sink the bill,” Seiberg said.