U.S. senators are tightening regulations around stablecoin rewards with a new draft market structure bill. This legislation, led by Senate Banking Committee Chair Tim Scott, prohibits digital asset service providers from offering any interest or yield for simply holding stablecoin balances. However, it does allow for activity-linked incentives, such as rewards for making transactions or providing liquidity. This marks a significant shift in the ongoing discussions between crypto firms and traditional banking institutions, aiming to resolve a contentious issue that has lingered since the GENIUS Act was passed in July 2025. The proposed bill reflects a compromise from Democratic Senator Angela Alsobrooks, who suggested that exchanges could provide yields if customers engage in specific activities, but not for idle balances. Banking groups have raised concerns that existing laws create loopholes, allowing platforms to offer interest-like returns, which they argue increases liquidity risks. Crypto firms, on the other hand, believe the matter was settled during prior negotiations and accuse banks of attempting to stifle competition. Coinbase has voiced strong opposition to more restrictive measures, warning that it would withdraw support for the bill if lawmakers further limit reward programs. The draft legislation does not address potential ethical concerns surrounding President Donald Trump's family's involvement in cryptocurrency ventures, an issue some Democrats wanted included. This oversight could impact public perception and the broader debate on crypto regulation.