US senators have shared an updated bipartisan draft of the Digital Asset Market Clarity Act (CLARITY Act), which prohibits platforms from paying interest or yield on stablecoin balances. In a new CoinDesk piece, Consensys’ Bill Hughes argues that today’s stablecoin yield battle is the latest round in a regulatory tug-of-war where, if we're smart, old rules must give way to new.
“We have seen this fight over stablecoin yields before,” explains Bill Hughes, Senior Counsel and Director of Global Regulatory Matters for Consensys.
“History instructs us that we should not shortchange innovation in favor of protecting incumbent interests. Right now, the banking lobby is pushing hard to upend the bargain Congress struck in the GENIUS Act.”
The GENIUS Act struck a careful balance: Last year’s landmark bill let licensed stablecoin issuers operate, but banned them from paying direct interest, sparking third-party yield platforms that consumers love.
Banks now want to slam this door: Banking lobby is pushing to block even these third-party yields in new digital asset legislation, with draft language limiting rewards to "active use" only, a move Hughes calls economically and historically flawed.
History shows us the right path. In the 1970s, money market funds boomed when savers fled low bank deposit rates, and congress eventually lifted rate ceilings rather than kill the innovation. Negotiable Order of Withdrawal accounts replaced decades-old bans on interest-bearing checking, proving regulators can redraw perimeters to favor consumers.
Stablecoins are the next evolution, and today’s fight follows a familiar pattern: new tech exposes regulatory gaps and the old guard cries foul. Smart policy should guide updates to the rules, and let competition thrive.
Hughes’ call to congress is clear: "We should let consumers, not incumbents, choose who wins”, and preserve the GENIUS Act’s pro-innovation framework instead of protecting banking turf.
Read Hughes’ CoinDesk Op-Ed in full.