Stablecoin Rewards Debate Stalls Crypto Market Structure Bill in Senate

The U.S. banking industry has been pushing back hard against a key piece of crypto legislation — the Digital Asset Market Clarity Act — over a growing dispute around stablecoin rewards. Traditional banks fear these incentives could pull deposits away from conventional financial institutions, threatening their core business model.

At the center of ongoing negotiations are Senators Angela Alsobrooks (D-MD) and Thom Tillis (R-NC), who are working toward a compromise that would allow limited stablecoin rewards while keeping safeguards in place to prevent significant deposit flight. Alsobrooks acknowledged during an American Bankers Association summit in Washington that both sides will likely walk away from the table with some dissatisfaction, signaling that a middle-ground solution is the realistic path forward.

The disagreement stems from the GENIUS Act passed last year, which prohibited payment stablecoin issuers from paying yield-style interest to customers. Banking groups argue that crypto platforms offering similar rewards through affiliated companies essentially bypass that restriction. ABA President Rob Nichols called it a clear attempt to sidestep congressional intent.

Senator Mike Rounds suggested rewards might be tied to account activity rather than balance size — a nuance that could shape how the final language is written. JPMorgan CEO Jamie Dimon has also signaled openness to transaction-based rewards, a concept that has been floated in White House discussions with the crypto industry.

The Office of the Comptroller of the Currency recently proposed rules aligned with the GENIUS Act, though its stance on rewards programs remains somewhat ambiguous. Industry advocates believe there is still enough room for compliant customer incentive programs under the current proposal.

Even if compromise language clears the Senate Banking Committee, broader Democratic concerns remain — including worries about DeFi vulnerabilities, unfilled regulatory seats, and restrictions on senior government officials profiting from personal crypto dealings, a reference widely interpreted as targeting President Trump.