[DigitalToday reporter Jinju Hong (홍진주)] Competition in the crypto market is being shaken as a draft U.S. stablecoin regulation is revised. In particular, a clause banning interest payments is directly affecting the business models of major companies.

On March 25 (local time), blockchain outlet Cryptopolitan reported that an updated draft of the recently released Clarity Act includes a ban on “passive income” that offers interest or rewards simply for holding stablecoins.

That change would hurt the revenue-sharing structure Circle has operated with Coinbase. The structure previously returned part of income generated from USD Coin (USDC) reserves to users, but it has been brought under the scope of regulation.

The market reaction was immediate. Circle’s shares fell more than 20 percent in a day, the biggest drop since its initial public offering, and Coinbase also fell more than 9 percent. For Coinbase, the hit is seen as unavoidable because about 20 percent of its total revenue comes from USDC-related income.

Tether, by contrast, is in a relatively freer position under the regulatory change. Tether has not provided separate income to stablecoin holders and has retained the income internally. As a result, the interest ban regulation has created a structure that works in favour of Tether, which has maintained its existing business model.

The updated bill bans passive income but allows rewards tied to payments, remittances and platform activity as a compromise. Specific standards and interpretations will be determined later by regulators including the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission and the U.S. Department of the Treasury.

Several steps remain before the bill can pass. It must go through a Senate vote (requiring 60 votes), House reconciliation and a presidential signature, and full legislative debate is expected to begin after mid-April. Even so, the market already appears to be starting to price in the regulation.

The regulatory change has also been raised as a factor that could spur a shift of funds into decentralised finance (DeFi). Major protocols such as Aave and Compound still offer stablecoin yields of about 5 to 20 percent a year, and that area remains a grey zone not directly affected by the regulation.

Unlike centralised companies, these services run on smart contracts, making direct regulation difficult under existing legal frameworks. In fact, the U.S. Congress has not set out clear DeFi regulatory provisions in the Clarity Act. If that structural gap persists, analysts say funds leaving centralised stablecoins are likely to move into DeFi and take root as a new source of yield.

Meanwhile, the industry sees the step as more than a simple tightening of regulation, and says it could change the structure of the stablecoin market itself. If the operating method of stablecoins, a core infrastructure linking fiat currency and cryptocurrencies, changes, analysts say knock-on effects across the broader digital asset market will be unavoidable.

The Clarity Act is becoming a turning point that will redefine who the winners are under the banner of regulatory clarity.