Shares of Circle Internet Group experienced a significant decline of 16% on Tuesday, while Coinbase Global Inc. also faced a downturn, with its stock sliding 7%. This downward trend follows reports of a proposed legislative framework in the United States that aims to impose limitations on yield offerings associated with stablecoins.
The news, initially brought to light by Crypto in America through an internal stakeholder email, suggests that the forthcoming regulations would prohibit platforms from offering any form of yield, whether direct or indirect, for holding a stablecoin. This includes any offerings that might resemble traditional bank deposits. The expected legislation appears to target a wide spectrum of digital asset service providers, encompassing exchanges, brokers, and their affiliates, as part of a strategy to mitigate potential circumventions of the proposed rules.
Under the new regulations, any payments or benefits that could be interpreted as “economically or functionally equivalent” to interest would be disallowed. However, the proposal does outline provisions for activity-based rewards linked to user engagement—such as loyalty programs, promotional benefits, or subscription services—as long as these do not fall under the definition of interest.
Furthermore, the proposal reportedly tasks the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Treasury Department with the responsibility of collaboratively defining what constitutes permissible rewards. They are also expected to establish anti-evasion rules within a one-year timeframe.
The implications of this potential legislation raise concerns within the cryptocurrency market, particularly among firms involved in stablecoin activities, as regulatory scrutiny continues to increase in this rapidly evolving sector.
