Circle Internet Group (NYSE:CRCL) shares fell 16% on Tuesday while Coinbase Global Inc (NASDAQ:COIN) stock declined 7% following reports of proposed US legislation that could limit yield offerings on stablecoins.
According to a report from Crypto in America, citing an internal stakeholder email, the proposed rules would prevent platforms from offering yield “directly or indirectly” for holding a stablecoin, or in any form resembling a bank deposit.
The restrictions would apply broadly to digital asset service providers, including exchanges, brokers, and their affiliates, in an effort to curb potential workarounds.
The legislation would bar any payments or benefits considered “economically or functionally equivalent” to interest, according to the report.
The proposal would allow activity-based rewards tied to user engagement, such as loyalty, promotional, or subscription programs, as long as they are not deemed equivalent to interest.
It also reportedly directs the Securities and Exchange Commission, Commodity Futures Trading Commission, and Treasury Department to jointly define permissible rewards and implement anti-evasion rules within one year.