Clarity Act Text Blocks Yield for Holding Stablecoins

TLDR

• The revised Senate draft bans yield payments for simply holding stablecoin balances.
• Lawmakers allow rewards only for specific user activities, not for token holdings.
• Banking groups pushed for limits to prevent stablecoin products from resembling bank deposits.
• Industry representatives reviewed the updated language during a closed-door Capitol Hill meeting.
• The draft leaves uncertainty around how issuers can calculate activity-based rewards.

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Lawmakers circulated revised Senate language that restricts stablecoin yield payments under the Digital Asset Market Clarity Act. The draft bars rewards for holding balances and narrows other incentive programs. Industry representatives reviewed the text during a closed-door session on Capitol Hill this week.

Crypto Clarity Bill Narrows Stablecoin Reward Programs

Senators Angela Alsobrooks and Thom Tillis released the updated language on Friday. The draft prohibits issuers from paying yield for simply holding a stablecoin balance. It also blocks any structure that resembles a traditional interest-bearing bank deposit.

Industry participants reviewed the section on Monday during a private meeting in Washington. A person familiar with the draft said the language appears “overly narrow and unclear.” The source added that the bill leaves uncertainty around how issuers may calculate activity-based rewards. Lawmakers aim to address concerns that stalled a Senate Banking Committee hearing.

Banking groups had argued that stablecoin rewards must differ from deposit interest. They said similar products could weaken bank lending and restrict credit markets. As a result, negotiators crafted a compromise that permits rewards tied to user activities but not balances.

The draft applies further limits on other incentive structures linked to stablecoin programs. However, the text does not define the exact mechanics for approved rewards. Lawmakers have not scheduled a public markup in the Senate Banking Committee.

Legislative Path Advances as Oversight Questions Continue

The House of Representatives passed a related Clarity Act version last year. Separately, the Senate Agriculture Committee advanced another version through a markup session. The Banking Committee review remains the next step before a full Senate vote.

Lawmakers continue to negotiate other unresolved sections of the bill. Democrats have pressed for clear oversight rules for decentralized finance platforms. They have also sought protection against illicit finance risks within digital asset markets.

Some Democrats have proposed banning senior government officials from profiting from crypto ventures. The provision targets potential conflicts of interest involving President Donald Trump. Negotiators have not released final language addressing that proposal.

The crypto sector secured a prior legislative win with the GENIUS Act. That law established federal standards for certain stablecoin issuers. Lawmakers described it as the first phase of a broader regulatory framework.

Industry representatives now await final Senate Banking Committee action on the revised draft. The closed-door review marked the first industry look at the stablecoin yield section. Lawmakers continue discussions as they prepare the next formal hearing.

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