U.S. lawmakers are drawing a clearer line on how stablecoins can be used to generate returns. A revised bipartisan market structure bill unveiled Monday would ban rewards for simply holding stablecoins, while still allowing incentives tied to actual activity like trading, staking, liquidity provision, or posting collateral.

This story is an excerpt from the Unchained Daily newsletter.

The update, released by Senate Banking Committee Chair Tim Scott, reflects months of negotiation between crypto firms and banks, with stablecoin yields emerging as one of the most contentious issues. Banks have warned that rewards on idle balances blur the line between stablecoins and deposits. Crypto firms counter that limiting incentives risks stifling innovation.

The compromise aims to split the difference: no “sit-and-earn” yields, but flexibility for platforms to reward usage. The draft also adds protections for developers, clarifying that writing or maintaining code alone does not make someone a financial intermediary.

The bill heads toward a key committee markup Thursday, marking a critical step in shaping U.S. crypto regulation.