Senate stablecoin yield deal boosts Clarity Act odds

Senators reached a deal Friday to ban payments on stablecoins that are “economically or functionally equivalent” to interest on bank deposits. Coinbase CEO Brian Armstrong signaled support for a committee markup, and the Clarity Act’s passage odds on Polymarket rose from 46% to 64%.

The draft text would bar interest-style yield on stablecoins while permitting “rewards or incentives” tied to bona fide activities such as transactions, payments, transfers, remittances and providing liquidity in decentralized finance protocols. The measure directs U.S. financial regulators to publish rules within one year to clarify when particular rewards cross into prohibited interest-like payments.

The Senate Banking Committee is moving toward a markup that could lead to a committee vote. Committee Chair Tim Scott wrote that members are nearing consensus and are working toward a bipartisan markup in May.

Armstrong had withdrawn support for the bill in January and prompted a postponement of a prior markup. He posted “Mark it up,” indicating he would not block the next procedural step.

Industry responses were mixed. Crypto investor Nic Carter posted, “The banks won.” Scott Johnsson, general counsel at Van Buren Capital, wrote, “This is fine,” adding, “It may not feel like it, but it is.” Blockchain Association CEO Summer Mersinger called the agreement “a step in the right direction” and urged the committee to move without delay.

Last year’s GENIUS Act banned stablecoin issuers from paying yield on customer digital dollars but left unclear whether third-party platforms such as exchanges could pay interest-equivalent returns. The Clarity Act’s current draft aims to close that gap by targeting payments that are economically or functionally equivalent to bank deposit interest while preserving the ability for platforms to offer transaction-based rewards.

The bill’s language does not fully define what counts as a bona fide activity versus passive yield, which makes the one-year rulemaking timeline important. Industry groups and companies are expected to press regulators for clear definitions during that rulemaking.

If the Senate advances the bill, lawmakers will need to reconcile the Senate draft with a House version before final passage. With the election season approaching, legislative work may slow and the timing of any final law remains uncertain.