CLARITY Act Compromise Limits Stablecoin Earnings, Leaves Gray Areas
The revised Digital Asset Market Clarity Act, unveiled to industry participants in a closed-door Capitol Hill session on Monday, allegedly bans passive yield on stablecoin balances while permitting rewards tied to user activity such as trading or payments.
That distinction sounds neat on paper, but early reactions suggest the execution may be anything but. According to reporting from Crypto America journalist and host, Eleanor Terrett, sources familiar with the draft said the “proposal would prohibit platforms from offering yield ‘directly or indirectly’ for holding a stablecoin or in a manner that resembles a bank deposit.”
Terrett added:
At the center of the issue is a long-running clash between crypto firms and traditional banks. Platforms like Coinbase have argued that offering rewards on stablecoins is a core feature, while banks warn such programs mimic deposit accounts and could siphon funds from the banking system.
Lawmakers appear to have split the difference. The compromise, reached March 20 by Sens. Thom Tillis and Angela Alsobrooks with White House backing, blocks yield tied to balances but allows incentives linked to user behavior.
The catch: the bill does not define how those activity-based rewards should work. Instead, it punts the details to regulators, giving the Securities and Exchange Commission, Commodity Futures Trading Commission, and Treasury one year to hash it out.
That one-year window leaves a gray zone where companies may operate without clear guardrails. For an industry that thrives on precision in code and contracts, ambiguity in law tends to land poorly.
Banks, meanwhile, are likely to view the framework as a win. By eliminating passive yield, the draft protects traditional savings products from direct competition with stablecoin accounts — a priority backed by heavy lobbying throughout 2025.
The broader CLARITY Act has been years in the making and already cleared the House in July 2025 with bipartisan support. Its core goal is to divide oversight between the SEC and CFTC, placing most blockchain-native assets under commodities regulation.
Still, stablecoin yield has proven to be the sticking point that repeatedly stalled progress. A January Senate draft banning yield outright prompted Coinbase CEO Brian Armstrong to withdraw support, helping derail a planned committee vote.
The latest compromise revives the bill’s momentum, but it does not guarantee passage. Lawmakers still face committee markup, a full Senate vote, reconciliation with competing versions, and ultimately a presidential signature.
And yield is not the only unresolved issue. Debates over decentralized finance ( DeFi) oversight, anti-money laundering rules, and ethics provisions remain active, adding more friction to an already crowded legislative path. “Up next: Bank reps are set to review the text tomorrow,” Terrett’s report concluded.
For now, the message from Washington is clear: earning yield just for parking stablecoins is off the table — but what replaces it is still very much a work in progress.
FAQ 🔎
- Does the CLARITY Act allow stablecoin interest?
No, the current Senate draft bans passive yield earned from simply holding stablecoins. - Are any rewards still allowed for stablecoins?
Yes, activity-based rewards tied to trading, payments, or usage are permitted under certain conditions. - Why are banks against stablecoin yield?
Banks argue interest-bearing stablecoins could compete directly with traditional savings accounts and pull deposits away. - When will final rules on stablecoin rewards be defined?
Regulators are expected to establish detailed rules within one year after the law takes effect.
Source: https://news.bitcoin.com/stablecoin-rewards-hit-a-wall-in-senates-clarity-act-draft-leaving-industry-guessing/
