New Senate legislation on crypto yield and retirement accounts

• A manager’s amendment introduced Jan. 12 ahead of a Jan. 15 markup would limit stablecoin reward programs while allowing loyalty or subscription incentives under New Senate legislation.
• Democrats ask the SEC about retirement account safeguards after Trump’s order, while banks, crypto firms debate yield, with the GENIUS Act and industry input shaping expectations.

New Senate legislation has become a central focus for banks, crypto firms and retirement savers, as lawmakers shape how digital asset rewards and stablecoin yield programs can operate under federal law. A new manager’s amendment, introduced late Monday Jan. 12 by the Senate Banking Committee ahead of a Jan. 15 markup, updates the draft framework that Republicans say will set clear rules of the road for digital assets while protecting Main Street investors. The text targets rewards tied to stablecoin balances, but it also sets out exemptions that may let digital asset companies keep some loyalty and incentive programs, keeping a tense balance between traditional financial institutions and crypto platforms.

New Senate legislation and stablecoin reward limits

Under the manager’s amendment, the committee proposes language that appears to restrict some forms of yield or reward programs connected to stablecoin holdings on crypto exchanges. The draft lists activities by digital asset firms that would be off limits, seeking to limit yield products that look like deposit substitutes without the safeguards of insured banking. Still, the same New Senate legislation includes carve-outs for several categories of activity, including membership or participation in loyalty, promotional, subscription or incentive programs. Those exemptions give crypto companies an opening to continue offering some forms of benefits, as long as they structure them within these defined categories and avoid crossing into deposit-like offerings. This reward question has turned into a major regulatory flash point since the passage of the GENIUS Act last year. The earlier law opened a path for broader use of digital assets, but it did not clearly resolve how much yield stablecoin platforms can pay before regulators treat them like banks or investment funds. Traditional banks argue that these yield mechanisms draw deposits away from community banking markets and create unfair competition, because banks must follow capital rules and insurance requirements while facing strict supervision. Cryptocurrency firms respond that yield incentives support liquidity, encourage user adoption and anchor activity in decentralized finance markets, and that banning yield outright would put the brakes on a young sector at a key stage. This clash now sits at the heart of the markup process for the New Senate legislation, as staff and lawmakers try to write language that satisfies neither side completely but still keeps markets stable. The timing of the amendment underlines how closely the committee manages the process. Senators received the manager’s amendment only days before the Thursday Jan. 15 markup, with staff expecting further technical changes as members negotiate over specific phrases and exceptions. The Republican side of the committee described the bill’s aim as creating clear rules of the road, but committee members acknowledge that yield on stablecoins, especially when platforms pool customer funds, remains an unresolved question with direct impact on banks’ funding bases and on retail users seeking relatively steady returns in place of savings accounts.

New Senate legislation and pressure on the SEC over retirement accounts

While the New Senate legislation works through its markup, the committee’s Democratic minority shifts attention to a parallel concern: the impact of digital assets in American retirement accounts. After President Donald Trump signed an executive order allowing pension funds and retirement savings vehicles such as 401(k) plans to hold cryptocurrency assets, Democrats on the Banking Committee pressed the Securities and Exchange Commission for a clear plan to protect investors. Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the committee, framed the issue sharply in a letter that questioned whether workers fully understand the risks that come with digital asset exposure in long-term retirement plans. Warren wrote that, for most Americans, a 401(k) serves as a lifeline for retirement security rather than a playground for financial risk. She warned that permitting crypto assets in these accounts sets up conditions where workers and families could lose large sums if volatile markets turn sharply lower. Her stance reflects a broader concern that the federal framework for digital asset disclosure, custody and valuation in retirement plans still lacks detail, even as some plan sponsors and asset managers explore new crypto-related options for participants. The New Senate legislation does not directly rewrite retirement plan rules, but the debate around it increases pressure on the SEC and Department of Labor to align their guidance with Congress’s approach to digital assets. The SEC now faces questions from Democrats about how it will supervise plan administrators that add crypto exposures, how it will monitor conflicts of interest and how it will handle advertising that highlights potential upside while downplaying risk. Agency staff must also decide how to treat stablecoins held in retirement accounts and whether yield-type features fall within investment company rules. These questions do not sit neatly within a single statute, so the New Senate legislation could become a reference point by setting baseline definitions for digital assets, digital asset intermediaries and various types of digital asset rewards.

GENIUS Act, federal policy shift and implications for banks

The regulatory flash point over yield programs links directly to the GENIUS Act, which passed the previous year as one of the first broad attempts to address digital assets in federal law. In a discussion with PYMNTS, Ryan Rugg, global head of digital assets for Citi Treasury and Trade Solutions, described the GENIUS Act as one part of a wider change in how Washington views financial innovation. She pointed to a cluster of moves during this period, including the executive order by President Trump and the establishment of a bitcoin reserve, as signs that the administration now treats digital assets as a core part of the financial landscape rather than a side experiment. Rugg argued that this environment matters for regulated institutions because banks cannot operate in gray areas when they deploy new products and infrastructure. They need clear statutes and clear agency guidance before they invest large sums and integrate digital asset services into existing platforms. According to her view, the GENIUS Act set out an initial framework, but the New Senate legislation marks another step by giving regulators a more specific pathway to start building detailed rules. These rules will cover how banks can hold digital assets on balance sheet, how they can interact with stablecoin issuers, and what types of yield and incentive schemes remain acceptable under safety and soundness standards. Banks watch the markup of the New Senate legislation closely because the outcome will shape how they respond to competition from crypto firms. If the final text restricts stablecoin reward programs more tightly, banks might see less pressure on deposits and more room to offer their own tokenized deposit products. If the exemptions for loyalty or promotional programs turn out broad, digital asset platforms could still design reward structures that attract users away from traditional savings accounts. Either way, regulated institutions must adapt to a world where executive orders, legislative acts and supervisory guidance keep changing the boundaries of what they can do with digital assets and how they must report those activities.

Market impact and the road ahead for New Senate legislation

For digital asset companies, the manager’s amendment represents both a challenge and a roadmap. Crypto exchanges that currently provide yield-like rewards on stablecoin holdings will need to examine whether their products fit within the exemption categories listed in the New Senate legislation, such as loyalty or subscription programs, or whether they should redesign offerings to avoid running into explicit prohibitions. Firms may also revise marketing language, shifting away from framing returns as interest-like yield and toward points, credits or other non-deposit concepts that align more closely with the bill’s protected categories. The market also watches how other parts of the federal government respond. If the SEC takes a more cautious stance on crypto in retirement accounts, plan sponsors could limit exposure, which in turn might reduce institutional demand that some digital asset advocates expected after the Trump executive order. At the same time, if regulators use the GENIUS Act and the New Senate legislation to clarify custody, reporting and capital treatment, some large banks and asset managers might feel more comfortable expanding digital asset services in a controlled way. That combination of tighter yield controls, clearer rules and cautious institutional uptake could produce a slower but more predictable growth path for the sector. Lawmakers now face a short window before the Jan. 15 markup to agree on final language for the manager’s amendment, consider further changes and secure enough support to move the bill out of committee. Any disagreements over the treatment of stablecoin rewards, the scope of exemptions and the balance between investor protection and innovation could still delay the schedule. However, the fact that committee leaders released a detailed manager’s amendment on Jan. 12 suggests they intend to push the New Senate legislation forward and give regulators a new statutory base for digital asset oversight.

Conclusion

The debate around the New Senate legislation shows how digital asset policy now touches core parts of the financial system, from everyday stablecoin accounts to retirement savings and bank balance sheets. The manager’s amendment attempts to narrow high-yield stablecoin programs while still leaving room for loyalty and incentive schemes that many platforms see as essential for user engagement. Democrats on the Banking Committee use the same moment to press the SEC on protecting workers whose 401(k) plans may add crypto exposure under the Trump executive order, highlighting concern over retirement security. Industry voices such as Ryan Rugg view this mix of legislative and executive action, from the GENIUS Act to the bitcoin reserve and the new bill, as evidence that Washington now treats digital assets as part of mainstream finance. As the committee moves toward the Jan. 15 markup, banks, crypto companies and regulators all look to the final form of the New Senate legislation to guide how they structure products, manage risk and plan their next steps in the evolving digital asset market.

Disclaimer

The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.

Featured image created by AI