THE YIELD BAN PAYS BY BALANCE, DURATION AND TENURE

The document is an amendment in the nature of a substitute to H.R. 3633, released Sunday night by Senator Cynthia Lummis’s office as EHF26724, 635 pages, ahead of Tuesday’s cloture vote. Republicans are calling it the last, best and final offer. The fight everyone named going in was stablecoin yield. Read what the text does with it.

Section 10404 is headed “PROHIBITING INTEREST AND YIELD ON PAYMENT STABLECOINS.” Subsection (c)(1) says no covered party shall “directly or indirectly, pay any form of interest or yield (whether in cash, tokens, or other consideration)” to a United States customer for holding a stablecoin. That is the headline the banks wanted and it is real.

Then read subparagraph (c)(3)(B), two pages on. Payments that are permissible “may be calculated by reference to a balance, duration, tenure, or any combination of the foregoing.”

Balance, duration and tenure are the three words the bank trade groups objected to in the earlier draft. They are still in the bill, inside the section that says prohibited.

What separates a banned payment from a permitted one is a single phrase: whether the payment is “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.” Nobody has defined it. Subsection (c)(3)(A) gives the two Commissions and the Secretary of the Treasury one year after enactment to write the rule that will. Until they do, a platform that structures a program in good faith is protected by subsection (c)(5) and gets 90 days to fix it if the rule later says no.

The bill also tells you which way Congress leans while it waits. The sense of Congress at (b)(2) says activity-based rewards tied to stablecoins “are critical to enabling innovation, competition, and consumer adoption.”

Now the switch. Subparagraph (c)(3)(C) is a regulatory circuit-breaker, and it has one operator. If, “not later than 18 months after the date of enactment,” the Secretary of the Treasury makes a written determination that depositors at community banks have moved interest-bearing deposits into stablecoins in an amount causing “substantial detrimental impact” to those deposits, and that it happened “due specifically to the activities regulated under this section,” the Secretary shall write rules banning the payments.

Three things sit inside that sentence. A community bank is defined as one with total consolidated assets under ten billion dollars. The determination must be in writing and must find the rules necessary to prevent further transfer. And the window closes: eighteen months after enactment, the trigger is gone.

So the banks did not get a prohibition. They got a heading, a sense of Congress, and a switch held by one named official that expires in a year and a half. The platforms got the calculation. The Treasury Secretary got the deciding vote on how much yield a private dollar may pay, and the Treasury Secretary is Scott Bessent.

Two things the text does not contain, and both matter to this reader.

The bill’s own long title still says it amends the Federal Reserve Act “to prohibit the Federal reserve banks from offering certain products or services directly to an individual, to prohibit the use of central bank digital currency for monetary policy.” The phrase “central bank digital currency” appears in this 635-page text exactly there and nowhere else. No section carries it. The title promises a ban the text no longer performs.

And the number 1960 does not appear in the bill at all. Section 10604, the Blockchain Regulatory Certainty Act, protects a non-controlling developer from being treated as a money transmitting business under section 5330, as a money transmitter under the Treasury regulation, or as a financial institution under section 5312. Title 18 section 1960, the criminal charge for unlicensed money transmitting, is not on that list.

What survived whole is section 10605, the Keep Your Coins Act: “A Federal agency may not prohibit, restrict, or otherwise impair the ability of a covered user to self-custody digital assets using a self-hosted wallet or other means to conduct transactions for any lawful purpose.” One page. No rulemaking, no circuit-breaker, no eighteen-month window.

That is the shape of the bill in two sections. What a dollar claim may pay you is a question for a rulemaking and a written determination by a cabinet officer. The right to hold your own coin is a sentence. Bitcoin’s issuance was never on the table either way, because there is nobody to make the determination.

At the time of this writing, bitcoin was $77,779 at 11:22 PM ET on CoinGecko.