Are Stablecoin Rewards About to Be Banned? White House Plans to Finalize Cryptocurrency Regulations by March 1

Key Points:

A U.S. bill draft may prohibit idle stablecoin yields, ending passive rewards for holders, while aiming to clarify regulatory guidelines.

The SEC, CFTC, and Treasury Department could impose fines of up to $500,000 per day for violations of stablecoin yield rules.

A clear cryptocurrency market framework could encourage institutional adoption but also limit incentives for popular stablecoins.

A draft bill circulating in Washington indicates that the crypto industry is heading toward its most decisive regulatory moment yet. This document, labeled as a discussion draft for the 119th Congress in the Senate, outlines a framework under the regulation of the Commodity Futures Trading Commission (CFTC) for governing the supply and sale of digital commodities. Still in early stages, the direction is clear: federal agencies are preparing to define who controls the cryptocurrency markets and how stablecoins operate.

Reports suggest that the White House has set March 1 as the deadline to advance a broader crypto market structure bill. One major issue has already been addressed.

Idle Stablecoin Balances Yield No Returns

This core decision directly disadvantages crypto companies and stablecoin holders. According to the draft discussed at this week’s meeting, companies will no longer be allowed to offer rewards solely for holding stablecoins. This effectively excludes savings account-style yield models.

The scope of the debate has narrowed. Legislators are now considering whether to allow rewards only when linked to specific structured activities, such as loans or other clearly defined financial uses. Passive income from idle funds appears to be an insurmountable bottom line.

Reports indicate that the White House directly hosted the meeting, provided the draft agenda, and guided the discussion. Major crypto firms like Coinbase and Ripple, venture capital firm a16z, and industry associations attended. Major banks also participated through their national banking associations, indicating high-level interest from traditional financial institutions regarding the outcome.

Enforcement Powers and Severe Penalties

The draft will grant enforcement authority to the SEC, Treasury, and CFTC. Violations of the idle yield ban could result in fines of up to $500,000 per violation per day. Such strict enforcement signals the government’s intent to eliminate any attempts to replicate deposit products with stablecoins without regulatory approval.

Banks are still pushing for formal research into deposit outflows. Their concern is straightforward: if stablecoin payments become widespread, consumers might transfer funds out of traditional bank deposits. This could reduce banks’ lending capacity and reshape the credit system.

Macro Perspective: Market Structure Clarity

Although stablecoin yields are declining, many in the crypto space see this broader bill as constructive. The bill aims to establish clearer rules on custody, exchange regulation, token classification, and the division of authority between the SEC and CFTC. For years, uncertainty over whether tokens are securities or commodities has hindered institutional adoption.

A formal framework could change this. Clear definitions can reduce regulatory risk and potentially unlock long-term capital, as enforcement standards have been ambiguous, causing institutional investors to remain cautious. The draft indicates Congress is working on a structured plan rather than scattered enforcement measures. Terms like “definitions” and “rulemaking” in the title suggest a comprehensive framework is being built.

Why This Matters for the Cryptocurrency Market

A yield ban could pressure stablecoin issuers that rely on rewards to attract users. Meanwhile, regulatory clarity might strengthen large institutions capable of operating under stricter compliance standards.

For the crypto market, it’s a moment of weighing options. On one hand, restrictions on idle stablecoin rewards weaken a popular incentive model. On the other, a clear federal framework could reduce enforcement risk, bring regulatory stability, and open the door for broader institutional participation.

Negotiations will continue this week. If negotiators reach an agreement by the end of the month, the framework could be officially enacted as early as March 1. The battle over stablecoin yields may be nearing its end. Once this obstacle is cleared, Washington appears ready to push the full crypto market structure bill into the next phase.