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Following a Senate vote to prohibit the Federal Reserve from issuing a central bank digital currency (CBDC), an agreement on stablecoin yields has established a boundary between passive interest and activity-based rewards.
The Senate’s 89-10 vote to pass an otherwise unrelated bill, the 21st Century ROAD to Housing Act, will ban the issuance of a dollar-denominated CBDC until December 31, 2030.
The ban was inserted as the second-to-last article in the bill, and although the measure still requires House approval, the scale of bipartisan support in the Senate suggests that a US retail CBDC is unlikely to emerge in the near term.
The bill also contains a carve-out for “open, permissionless, and private” dollar-denominated instruments, implicitly preserving space for privately-issued stablecoins.
The retail CBDC ban means the Fed has lost a key tool for competing with private stablecoins, so will have to rely on indirect supervision of private issuers to maintain the dollar’s dominance.
It also reinforces the contrast in approach between the US and jurisdictions such as the BRICS nations and the EU that are moving ahead with CBDC projects.
CLARITY Act yield compromise
As US lawmakers look to sideline CBDC in favour of stablecoins, a significant step forward came with the release of compromise text for the CLARITY Act, a comprehensive market structure bill.
Negotiated by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) with White House backing, the draft resolves a long-standing impasse by establishing a ban on passive yields.
Under the new text, stablecoin issuers are prohibited from paying yield to users solely for holding a balance. This represents a victory for the American Bankers Association, which had argued that high-yield stablecoins posed a systemic threat of deposit flight from traditional banks.
However, the draft preserves a pathway for “activity-based rewards”, meaning crypto platforms may still offer incentives tied to usage such as transaction rebates, loyalty programmes, or liquidity provision.
As covered by Vixio, the White House and the wider crypto industry had been pushing for a compromise that would allow firms to offer such rewards to stablecoin holders.
The compromise may diminish the risk that the legislation is never enacted. There has been pressure, given that if it fails to progress through the Senate before the August 2026 recess, it may be lost to the November mid-term elections, meaning there is a risk it will be delayed until 2027 or 2028, or dropped altogether if policy priorities change.
OCC forging ahead
As Congress finalises these issues, federal regulators are filling the gap by moving ahead with implementing the GENIUS Act.
Last week, the Office of the Comptroller of the Currency (OCC) issued a 300-page notice of proposed rulemaking to implement the GENIUS Act, establishing a comprehensive, bank-style framework for stablecoin issuers.
The proposal covers licensing, reserve requirements, capital standards, custody and ongoing supervision, effectively translating the statute into an operational compliance regime.
Notably, the OCC adopts a restrictive stance on stablecoin yield, noting that the GENIUS Act prohibits the payment of “any form of interest or yield” solely in connection with the “holding, use, or retention” of payment stablecoins.
The OCC’s proposals also include anti-evasion provisions designed to capture indirect yield structures, such as those facilitated through affiliates or third parties.
Although formally grounded in enacted legislation, the OCC’s approach risks getting ahead of Congress’s finalisation of the CLARITY Act.
The OCC is seeking comment on all provisions of the proposed rule and aspects of the proposed regulatory framework. Comments are due by May 1, 2026.
Regulators move towards unified approach to crypto-assets
Alongside the OCC’s proposal, other agencies are also clarifying the future regulatory perimeter for digital assets.
Last week, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) each issued statements addressing the application of federal securities laws to crypto-assets.
Together, these statements move toward a more defined taxonomy, indicating that many digital assets, particularly those that do not confer rights analogous to traditional securities, fall outside the scope of federal securities laws.
In practice, this implies a larger role for the CFTC in overseeing spot crypto markets, while reinforcing the SEC’s jurisdiction over tokenised securities and similar instruments.
In addition, the Federal Deposit Insurance Corporation (FDIC) has clarified that stablecoins do not benefit from “pass-through” deposit insurance, even when held through intermediaries.
This distinction is significant for consumer protection and risk disclosure, reinforcing that stablecoins do not carry the same guarantees as insured bank deposits.
The future of crypto and stablecoin regulation in the US
Taken together, these developments suggest that the US is moving towards a more coherent regulatory framework for digital assets, but through a process that is neither linear nor fully coordinated.
One major policy question, the role of retail CBDC, appears increasingly settled, whereas others, most notably the economics and permissible features of stablecoins, are yet to be fully resolved at the legislative level.
Meanwhile, regulators are proceeding to define an implementing framework that may be undermined by future Congressional action.
For legal and compliance professionals, the practical implication is that regulatory clarity is emerging, but firms may need to adapt to a framework that evolves in stages, and is not yet fully settled.
They must navigate regulatory fragmentation, including a looming collision between the OCC’s restrictive bank-style standards and a potentially more permissive CLARITY Act.
Firms must decide whether to build compliance architectures around the OCC’s regulatory model or wait for a legislative compromise that may not arrive until after the 2026 midterms.
