US compromise on allowing stablecoin interest payments seen as imminent…a watershed for the market-structure bill

A potential compromise could be reached as soon as this week on the issue of interest payments on stablecoins—one of the key sticking points in the stalled crypto-asset market-structure legislation in the US Congress.

According to Decrypt on the 18th (local time), Tim Scott, chair of the US Senate Banking Committee, said at the Washington, DC Blockchain Summit that "we should be able to review the first draft within this week," pointing to the possibility of agreement on the stablecoin interest issue.

At the center of the debate is whether crypto firms such as Coinbase can pay interest to stablecoin holders. Stablecoins are tokens pegged to the US dollar, and some platforms have operated models that pay a set yield when users deposit them.

Banks argue such structures should be prohibited because they compete with low-rate deposit products and could affect the financial system. The crypto industry, by contrast, says it is essential to expanding stablecoin usage and attracting users.

The conflict has been a key factor delaying market-structure talks. Unlike the CLARITY Act, which passed the House last year, legislation in the Senate has been held up by disagreements over major issues.

The market-structure bill aims to clarify the legal status of the crypto industry and bring token issuance and distribution into the regulatory perimeter. If passed, US crypto firms would be able to pursue retail-facing businesses more stably.

However, ahead of a vote in the Senate Banking Committee in January, Coinbase withdrew its support for the bill, citing the possibility of restrictions on stablecoin rewards, bringing the timetable to a halt. The White House later sought to broker talks between banks and the crypto industry, but the effort fell short of an agreement.

More recently, Senators Thom Tillis and Angela Alsobrooks have moved to hold direct consultations with the White House and Senate leadership, in a renewed push to break the impasse. The White House is also said to be preparing to announce developments as early as the 19th.

Time, however, is limited. Dusty Johnson, chair of the House Digital Assets Subcommittee, warned that "the Senate has about six weeks left to pass the bill" and that "it could inadvertently miss the opportunity."

The stablecoin interest issue is seen as more than a simple regulatory question, with direct implications for market growth. Pierre Yared, chair of the White House Council of Economic Advisers, said, "The impact on the banking system could be limited, but it could have a big impact on stablecoin adoption."

Separately, unresolved issues remain, including whether to regulate crypto businesses tied to former President Donald Trump's family, and the scope of regulation for decentralized finance (DeFi). Some in the industry say they could withdraw support for the bill if DeFi-related regulation is tightened.

Despite these challenges, Scott underscored the prospects for a deal, saying, "Let's hope we can get it resolved."