Q: What is the main purpose of the US proposed stablecoin yield legislation? A: Its purpose is to ban payments on stablecoins that are “economically or functionally equivalent” to interest, effectively preventing interest-like yield programs on dollar-pegged tokens. The draft also directs the SEC, CFTC and Treasury to define permitted rewards and set anti-evasion rules within one year. Q: Which platforms and entities would the proposed law affect? A: The draft would apply broadly to digital asset service providers including centralized exchanges, brokers, custodians, wallets, payment firms, affiliates and white-label partners. It is intended to block routing interest-like payments through partners or affiliates. Q: What types of stablecoin rewards would likely be banned under the draft? A: Payments that scale with the size of a stablecoin balance or the time coins are held, programs advertising APY or a stated rate, sweeps of stablecoin funds into money market funds with pass-through payouts, and bundled “earn” features that pay for simply holding a balance would be at risk. The core test is whether a payment is economically or functionally equivalent to interest. Q: What rewards might remain allowed under the draft? A: Activity-based perks that are not tied to balance or holding time — such as loyalty points for trades or referrals, tiered access or fee discounts for engagement milestones, one-time promotional credits with clear caps, and subscription benefits that provide features rather than cash — could remain permitted. The key is that benefits must not be linked to how much stablecoin a user holds or how long they hold it. Q: How should platforms change product design and marketing to comply? A: Platforms should audit and remove balance- or time-triggered “earn,” “rewards,” or “yield” features, strip APY labels and rate tables, end sweep programs that pass market yields, and separate stablecoin custody from any investment product that pays a rate. Marketing should avoid bank-like words such as “APY,” “interest,” “deposit,” or “savings” and instead describe action-based benefits with clear caps and disclosures. Q: What compliance and operational steps should firms take now? A: Firms should create an “interest-equivalency” checklist, route all reward changes through legal, compliance, and finance sign-off, and keep records showing why a perk is not tied to balance or time. They should also tag reward events, run monthly tests to confirm no reward scales with balance or holding time, and prepare an internal rulebook aligned to coming SEC, CFTC and Treasury guidance. Q: What should users and investors watch for when evaluating stablecoin rewards? A: Check whether a perk scales with your balance or the time you hold stablecoins, whether a stated rate or APY is advertised, or if rewards are paid in cash or stablecoins for simply holding, as those are red flags. Safer options include activity-driven, capped, non-cash perks like fee discounts, fixed-value coupons, or loyalty points tied to actions rather than balances. Q: What is the expected regulatory timeline and possible scenarios if the bill advances? A: The draft reportedly instructs the SEC, CFTC, and Treasury to write definitions for permissible rewards and implement anti-evasion rules within one year, and a comment period is likely as agencies draft rules. Possible scenarios range from a strict, fast ban on interest-like payouts to a moderate ban with safe harbors and caps, or an enforcement-first approach while definitions are delayed.