US Senators at an impasse: Who will control the income from stablecoins?

The regulatory standardization process for digital assets in the United States is approaching a critical point, but an unexpected milestone has appeared on the legislative path. While the House of Representatives has already prepared the Digital Asset Market Clarity Act, which defines oversight over certain tokens, the Senate is engaged in deep negotiations over what seems to be a technical issue: whether stablecoin users should have the right to earn returns from treasury bond reserves.

The Battle for Financial Gains from Payment Tokens

The core dispute among lawmakers concerns the interpretation of the term “profit." Stablecoins that hold reserves in short-term government securities could theoretically share returns with investors through direct interest payments or promotional reward programs offered by related entities. Democrats see this practice as a threat to the traditional banking system—if stablecoins begin offering returns close to 5%, while traditional banks provide only 0.01% to 0.5% on checking accounts, depositors might mass-move funds into digital alternatives.

Democratic senators argue that such capital migration could undermine the ability of local financial institutions to lend, especially in rural areas. Republicans, on the other hand, claim that blocking such returns discriminates against innovative solutions in favor of maintaining the status quo of banking.

Stress Scenario Valued at $6.6 Trillion

The discussion gained momentum after the Bank Policy Institute (BPI) revealed a gap in the GENIUS Act, legislation passed by Congress earlier this year. The legislation prohibits issuers from directly paying interest but leaves an opening for exchanges and marketing entities offering rewards linked to reserve assets. Using federal agency scenario simulations, BPI estimated that under a liberal approach to compensation, up to $6.6 trillion in deposits could be transferred from the traditional system to the stablecoin ecosystem.

It should be emphasized that analysts refer to this number as an extreme scenario, not a concrete forecast. The assumptions built into the model include a high degree of substitutability between traditional deposits and tokenized cash, as well as rapid on-chain transfers without usual settlement delays. Nonetheless, this estimate has become a reference point in Senate discussions, justifying Democrats’ firm stance on the issue of returns.

Legal Definition Challenges

The problem lies in precisely defining the terms “profit,” “issuer,” and “related entity." The GENIUS Act imposes requirements on issuers to maintain full reserves and storage standards but does not specify whether economic returns equivalent to interest, distributed by separate entities, are prohibited. The banking industry is urging Congress to explicitly state that any return from reserve assets—regardless of distribution channel—should be subject to a ban.

Meanwhile, representatives from the cryptocurrency sector argue that such restrictions would place stablecoins at a competitive disadvantage compared to fintech companies that already offer similar reward programs. They also point to practices in the European Union and the United Kingdom, where more flexible frameworks are being developed for tokenized cash instruments.

Other Legislative Obstacles Blocking Reform

The issue of stablecoin profits is not the only unresolved matter in negotiations. Democratic senators have added additional conditions: ethical rules limiting officials and their close associates from issuing or benefiting from digital assets, a requirement for a full SEC and CFTC commissioner roster before transferring new supervisory powers, and more precise definitions of decentralization to prevent evasion of obligations.

These additional demands have significantly narrowed the scope for negotiation. Senate staff indicate that a vote before the parliamentary recess is unlikely, meaning that the final decision could be postponed until 2026. During this period, regulatory gaps would remain open, and the SEC and CFTC would continue shaping the digital asset market through enforcement actions and interpretative measures.