Context on the Senate’s New Stablecoin Draft
The Senate’s newly released draft market structure bill draws a clear distinction between rewards paid on idle stablecoin balances and returns tied to active use of capital. The proposal seeks to limit “hold-to-earn” stablecoin models, while allowing activity-based economics linked to functions such as settlement, collateral posting, liquidity provision, and other operational workflows. From Lynq’s perspective, this distinction is central to understanding how institutional financial infrastructure operates and why not all forms of yield should be viewed through the same regulatory lens.
Jerald David, Lynq’s CEO opines on the matter…
From Lynq’s perspective, how is transaction-based, intraday yield different from the passive “hold-to-earn” models lawmakers appear to be targeting?
The key difference is that Lynq isn’t a stablecoin platform. Any return in our model comes from an underlying interest-bearing instrument being used in settlement or collateral workflows, and it only accrues while that capital is actually deployed and in motion, often for very short, intraday windows.
Does this bill reinforce the case for regulated, settlement-native yield inside institutional rails versus platform-level incentives?
Yes, and more broadly, it reinforces a distinction we’ve been clear about from the start. Lynq isn’t a stablecoin platform, and the bill is aimed at reward programs attached to stablecoin balances sitting idle. What the language emphasizes instead is that any economic return should be tied to how capital is actually used inside regulated workflows such as settlement, collateral movement, and liquidity management, not paid as a platform incentive for holding a balance. That framing maps cleanly to how institutional settlement infrastructure works, where yield is a function of activity and market mechanics, not a promotional feature layered on top.
Is there a risk regulators conflate all forms of “yield,” or does this moment create room to clarify what yield looks like in practice?
There is always some risk of conflation, but this legislative moment actually creates an opportunity to draw clearer lines. Yield paid on payment stablecoins is a distinct concept from returns generated by non-stablecoin instruments used in traditional financial workflows, and treating them the same would miss important structural differences. By clarifying definitions and focusing on the source of returns—whether from idle balances or from active, time-bound use of capital—regulators and market participants can better distinguish between stablecoin rewards and infrastructure-native economics that fall outside the scope of these restrictions.