A bipartisan crypto bill would directly address yield-bearing stablecoins, though the measure remains unlikely to clear Congress before the end of the 118th Congress, American Banker reported.

The draft legislation marks the latest congressional effort to resolve whether issuers of dollar-pegged tokens can pay holders a return comparable to traditional bank deposit interest without triggering existing banking, securities or commodities regulations. The text has not been made public in full.

What the bill targets

The proposal centers on stablecoins that distribute yield through rebasing mechanisms, reserve-asset distributions or tokenized wrappers. These instruments have proliferated as issuers structured offerings to either pay yield offshore or route returns through non-U.S. entities, according to industry observers cited by American Banker.

The bill would attempt to distinguish permissible yield mechanisms — those backed by short-duration Treasuries and other liquid reserves — from structures that functionally replicate bank deposits without the corresponding capital, liquidity and disclosure requirements.

The Senate Agriculture and Banking committees share jurisdiction over stablecoin policy. American Banker reported that any yield-related framework would likely require sign-off from both panels before advancing.

Why passage remains unlikely

The measure joins a crowded field of stalled digital asset proposals, including market-structure reform legislation that has struggled to advance. American Banker reported that limited committee capacity, competing priorities and the narrow remaining window have all weighed against the bill's prospects.

Several Banking Committee and Agriculture Committee members have not publicly signaled support. Bank trade groups and crypto industry advocates remain publicly divided over whether yield should be permitted on U.S.-issued stablecoins at all.

Prior congressional efforts on payment stablecoins advanced through earlier sessions of Congress but did not directly address yield. American Banker noted the current text is the first in this Congress to take up the question explicitly.

The bank vs. issuer divide

For traditional banks, the central question is whether yield-bearing stablecoins should fall inside the same regulatory perimeter as deposit-taking institutions. American Banker reported that bank lobbyists view existing structures as creating regulatory arbitrage that disadvantages chartered lenders and raises potential systemic risk concerns.

Crypto issuers have argued the opposite, contending that on-chain yield distribution relies on reserve-asset returns rather than fractional lending. They have pressed for explicit safe-harbors permitting rebasing mechanisms and wrapper structures to operate in the U.S. without reclassification as deposits or securities.

The disagreement has sharpened as yield-bearing instruments moved into the mainstream of crypto trading activity, drawing heightened attention from prudential regulators over potential deposit displacement at U.S. banks.

Forward outlook

The legislative calendar leaves limited room for movement before year-end. American Banker reported that staff-level negotiations are expected to continue informally, with any binding framework more likely to emerge as part of a broader digital asset package in the next Congress than as standalone legislation in the current session.