Tillis to release draft aimed at ending stablecoin yield dispute

Sen. Thom Tillis plans to publish a draft this week intended to resolve a Senate dispute over language that would bar third parties, including crypto exchanges, from offering interest on stablecoin balances. That provision has stalled progress on the chamber’s crypto market structure bill.

The draft was circulated earlier to banking and crypto industry representatives and drew objections from bank groups, according to people involved in the discussions.

Bank organizations argue that third-party stablecoin yields could prompt retail customers to withdraw funds from insured bank accounts and move them to crypto platforms, creating funding pressure for banks. Crypto firms say yield offerings are a core business line for their platforms and that those products are contractual arrangements distinct from bank deposits.

Tillis acknowledged the objections, noting the draft was informed by concerns about deposit flight tied to yield. He said negotiators have made progress on language meant to prevent regulatory evasion but that enforcement provisions remain under negotiation.

The contested provision sits inside a broader Senate bill that would define how the two main federal market regulators oversee digital asset markets. The legislation has been in limbo since the House passed the CLARITY Act in July.

White House officials have convened three meetings between bank and crypto representatives to try to bridge differences. Tillis indicated he would call another session if the draft does not win agreement from both sides.

Lawmakers are also debating which regulator would have authority over specific activities and how to stop entities from routing activity through third parties to avoid oversight. Those enforcement and anti-evasion provisions remain points of contention.

If senators reach agreement on the disputed language, the bill could move to floor debate and then to negotiations with the House on a final measure. The talks will determine the next steps for federal rules governing stablecoins and related services.