US Crypto Legislation Hits Senate Milestone But Stablecoin Yield Debate Threatens Progress
Senate Agriculture Committee advances market structure bill as industry divided over yield-bearing stablecoins
The Senate markup represents the furthest any crypto-specific legislation has advanced in Congress, building on momentum from the White House's recent convening of banking and crypto industry leaders.
The stablecoin yield question has created unusual divisions within the industry. Traditional banking interests argue that yield-bearing stablecoins would essentially function as unregulated money market funds, while crypto advocates see yield as essential for competing with traditional finance.
Tether CEO Paolo Ardoino sought to distance his company from the debate, telling reporters that Tether has no beef in this fight. The largest stablecoin issuer's neutrality is notable given the company's dominant market position.
Senators are considering amendments that would either ban stablecoin yields entirely, cap them at treasury rates, or allow them with enhanced disclosure requirements. The outcome could reshape the $150 billion stablecoin market.
Analysis
Why This Matters
This is the closest the US has come to comprehensive crypto regulation. The outcome will determine whether American crypto companies can operate domestically or continue moving offshore.
Background
The SEC has taken an enforcement-first approach to crypto, leaving companies in regulatory limbo. This legislation aims to provide clarity by defining which assets are securities vs. commodities.
Key Perspectives
Banks want stablecoins treated like money market funds. Crypto companies want a lighter touch. Tether's neutrality suggests the biggest players may adapt either way.
What to Watch
Watch for the final yield language. If yields are banned, expect significant market restructuring. A floor vote could come within weeks.