As the U.S. Congress advances cryptocurrency market structure legislation, a critical debate has emerged over the regulation of stablecoin rewards. Banking lobbyists are pushing for provisions that would restrict rewards exclusively to merchant transactions, a move characterized by Paradigm’s Alex Grieve as an economically flawed attempt to fit 21st-century technology into a 20th-century regulatory framework—specifically, by treating stablecoins like credit cards. This approach, Grieve argues, is fundamentally misguided. Stablecoins operate on a debit-card model, not a credit-card model. Their revenue is generated not from merchant transaction fees but from the yield earned on reserve assets like U.S. Treasuries. Value in this ecosystem is derived from Assets Under Management (AUM), not transaction volume. A policy mandating rewards only upon consumer spending would effectively confiscate the yield earned while the asset is held, imposing what Grieve terms a ‘holding tax’ on everyday users. Under the current GENIUS Act framework, partners like exchanges can share reserve yield with stablecoin holders—a fair exchange for providing liquidity. The proposed change would legally require issuers to retain all yield unless a retail purchase is made. For example, a user holding $10,000 in stablecoin could earn approximately $450 annually from Treasury yield at a 4.5% rate, which competitive markets would largely return to the user. Under a transaction-only reward model, that user would earn nothing for holding and would need to spend $22,500 annually to earn the same $450 via a 2% cashback reward. Grieve warns this policy would harm consumers, especially those using stablecoins for B2B payments, cross-border remittances, or as a store of value, forcing them to subsidize intermediaries. It also ignores real-world use cases, potentially stifling the growth of U.S.-based stablecoin applications. Businesses might opt for unregulated offshore alternatives, leading to a flight of liquidity and demand for U.S. Treasuries. In conclusion, Grieve asserts that regulation must align with the underlying technology. Stablecoin value is created through holding, not just spending. Restricting rewards to transactions solves a non-existent problem with outdated thinking. For the U.S. to foster a competitive stablecoin market, economic benefits must flow to the activity that creates value: the act of holding the asset itself. The GENIUS Act, a landmark pro-innovation bill, must not be rolled back into a less efficient, higher-cost replica of a past era.