US lawmakers urged to reconsider expanded limits on digital asset incentives
Crypto advocacy groups are calling on US lawmakers to rethink proposed restrictions that could limit how stablecoin rewards are offered across the digital asset ecosystem. The debate comes as Congress considers broader legislation affecting crypto taxation, accounting standards, and stablecoin usage, with industry leaders warning that overly restrictive rules could stifle innovation and competition.
Stablecoin rewards under scrutiny
More than 125 crypto companies and industry organizations have formally urged the US Senate Banking Committee to oppose efforts to extend restrictions on stablecoin rewards beyond issuers themselves. The concern centers on proposals that would prevent third-party platforms, such as exchanges and wallets, from offering yield-like incentives tied to stablecoins.’
Industry representatives argue that limiting rewards to issuers alone would concentrate power among large players, making it harder for smaller firms and startups to compete. They contend that reward mechanisms are functionally similar to incentives long used in traditional finance, including bank account interest and credit card cashback programs.
Innovation and market competition at risk
According to the groups, banning or severely limiting stablecoin rewards could discourage user adoption and reduce consumer choice. They warn that such measures may unintentionally push innovation offshore or into less regulated environments.
Stablecoins play a growing role in payments, trading, and settlement, and incentives are seen as a key tool for encouraging liquidity and usage, particularly in emerging applications like cross-border transfers and on-chain financial services.
The pushback comes alongside proposed changes to crypto tax treatment, including applying wash sale rules to actively traded digital assets, clarifying the treatment of certain crypto lending arrangements, and allowing traders to elect mark-to-market accounting for digital assets. Together, these measures signal a shift toward integrating crypto more deeply into existing financial frameworks.
As lawmakers refine digital asset legislation, industry groups are urging a balanced approach. They argue that thoughtful regulation can protect consumers while still allowing stablecoins and related innovations to develop in a competitive and open market.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.