Circle Internet Group (NYSE:CRCL) fell 17% on Tuesday, and Coinbase Global (NASDAQ:COIN) declined 8% after media accounts described details of a proposed legislative compromise on stablecoin yields and rewards.
The market moves followed reporting, citing an internal stakeholder email, that outlined restrictions in a draft proposal. Under the described language, platforms would be barred from offering yield "directly or indirectly" for holding a stablecoin or in a manner resembling a bank deposit.
That prohibition would extend to a wide range of digital asset service providers, including exchanges, brokers, and their affiliates, according to the report. The aim of the extension to affiliates would be to close potential workarounds that could otherwise replicate the economic effect of interest payments.
The proposed text would outlaw anything that is "economically or functionally equivalent" to interest, while still allowing certain activity-linked incentives. Specifically, activity-based rewards tied to user behavior - such as loyalty, promotional, or subscription programs - would be permissible so long as they are not judged to be economically or functionally equivalent to interest.
Implementation responsibilities in the draft would fall to the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Treasury Department. The proposal would require those agencies to jointly define what rewards are allowable and to establish anti-evasion rules, with a one-year deadline to do so.
The reports prompted immediate equity-market reactions for firms exposed to stablecoin products and yield programs. The reported restrictions focus narrowly on the structure and economic equivalence of rewards tied to stablecoin holdings and do not, in the reporting, expand beyond the groups of providers and the one-year regulatory timetable described above.
Available reporting cites an internal stakeholder communication as the source of the compromise language. The description of the proposal in those reports is the basis for the market moves noted above; no additional legislative text or outcomes are included in the reporting cited.