Clarity Act momentum grows after stablecoin yield deal

Senators reached a deal on Friday to ban interest-like payments on stablecoins and moved the Clarity Act toward a Senate Banking Committee markup after Coinbase CEO Brian Armstrong signaled support.

The draft would bar payments that are ‘economically or functionally equivalent’ to interest on bank deposits while allowing rewards tied to specific user activities such as transactions, transfers, remittances and providing liquidity.

The committee could vote on a markup as soon as May. A prediction market showed the bill’s odds of passing in 2026 rising after Armstrong’s signal, moving from 46% to 64%.

Last year’s GENIUS Act banned stablecoin issuers from paying yield on customer balances but left unclear whether third-party platforms could offer interest-like payments. Banks lobbied lawmakers to close that gap, arguing higher stablecoin yields could draw deposits away from traditional accounts.

January’s compromise banned passive yield but allowed ‘rewards or incentives’ for bona fide activities. The latest draft retains that framework and adds an explicit prohibition on payments that resemble bank deposit interest.

Armstrong withdrew support in January, delaying a planned markup, and negotiators returned to the table. On Friday he posted ‘Mark it up’ on X, signaling he would back a committee vote.

Reactions in the crypto industry were mixed. Investor Nic Carter posted ‘The banks won.’ Scott Johnsson, general counsel at Van Buren Capital, called the compromise acceptable. Blockchain Association CEO Summer Mersinger wrote that resolving the yield question ‘clears the path to a Senate Banking Committee markup’ and urged the committee to act without delay.

The draft directs U.S. financial regulators to issue rules within one year to define when rewards cross the line into prohibited interest-like payments, leaving detailed standards to the forthcoming rulemaking.

If the Senate advances the Clarity Act, lawmakers must reconcile the Senate text with a House bill passed nearly a year ago. The legislative calendar is constrained by the election cycle. Senate Banking Committee Chair Tim Scott wrote that the committee ‘is nearing consensus’ and is working toward a bipartisan markup in May.

Lawmakers, regulators and industry groups are awaiting the committee vote and the agencies’ rulemaking to determine how the ban will be applied in practice.