Clarity Act Odds Rise After Stablecoin Yield Deal

Senators reached an agreement to prohibit payments on stablecoins that are economically or functionally equivalent to interest on bank deposits while allowing “rewards or incentives” tied to bona fide activities such as transactions, payments, transfers, remittances and providing liquidity in decentralized finance protocols. The draft directs U.S. financial regulators to issue rules within one year to clarify when a payment crosses the line into prohibited interest-like yield.

The agreement follows months of negotiation. Coinbase CEO Brian Armstrong had withdrawn his support in January and delayed a planned committee markup, citing concerns with the bill’s language. After the latest compromise he wrote on social media, “Mark it up.” A prediction market tracking the bill’s prospects showed the odds of the Clarity Act passing in 2026 rising from 46% to 64% after the announcement. Senate Banking Committee Chair Tim Scott wrote that lawmakers were nearing consensus and were working toward a bipartisan markup in May.

Industry reaction was mixed. Crypto investor Nic Carter posted, “The banks won.” Scott Johnsson, general counsel at Van Buren Capital, wrote, “This is fine.” The Blockchain Association welcomed the agreement and urged the committee to move forward without delay.

The Clarity Act aims to resolve ambiguity left by last year’s GENIUS Act, which barred stablecoin issuers from paying yield but did not clearly address whether third-party platforms such as exchanges could offer interest-like payments. Supporters of tighter limits have argued that high-yield stablecoin products could draw deposits away from traditional bank accounts. The current draft separates passive yield payments, which would be banned, from activity-based rewards, which would remain permitted.

Key procedural hurdles remain. The Senate version must be reconciled with a House bill passed nearly a year ago. Legislative work is expected to slow as the election season approaches. If the Banking Committee holds a markup and advances the bill, it would still face floor votes and a conference with the House before reaching the president’s desk.

Under the draft, regulators’ forthcoming rulemaking will determine how the statutory language applies to exchanges, custodians and decentralized finance platforms and will set the tests for when a payment becomes interest-like.