Senate Stablecoin Yield Deal, Coinbase Backing Boosts Clarity Act

Senators reached a deal Friday to prohibit payments on stablecoins that are “economically or functionally equivalent” to interest on bank deposits. Coinbase CEO Brian Armstrong posted a short message urging the Senate Banking Committee to advance the measure, and market estimates for the Clarity Act’s chance of passage in 2026 rose sharply.

The draft language would ban interest or yield that mirrors bank deposit interest while permitting “rewards or incentives” tied to bona fide activity such as transactions, payments, transfers, remittances and providing liquidity in decentralized finance protocols. The bill would give U.S. financial regulators one year to issue rules defining when a payment crosses the line into prohibited interest.

The text narrows issues left by last year’s GENIUS Act, which barred stablecoin issuers from paying yield on customer balances. Banks had pressed lawmakers to close a perceived loophole that might allow third-party crypto firms, including exchanges, to pay interest on stablecoins; the Clarity Act defines the ban to address that concern.

Armstrong withdrew support for the bill in January, prompting Senate Banking Committee Chair Tim Scott to postpone a planned markup and sending negotiators back to the table. On Friday Armstrong posted a two-word message: “Mark it up.”

Predictive market odds moved from roughly 46% to about 64% after that message. Reactions within the industry varied: investor Nic Carter posted “The banks won.” Scott Johnsson, general counsel at Van Buren Capital, wrote “This is fine. It may not feel like it, but it is.” Blockchain Association CEO Summer Mersinger described the agreement as progress on market-structure legislation and urged the committee to act quickly. Senator Scott wrote that the committee is nearing consensus and planning a bipartisan markup in May.

The Senate draft must be reconciled with a House version of digital-asset legislation passed nearly a year ago. If the committee advances the measure, the two chambers will need to resolve differences before any final bill reaches the president, and lawmakers face a compressed calendar as the election season approaches.

The draft’s allowance for rewards on bona fide activity leaves open practical questions about what promotions and incentive programs will be permissible. Agencies will use the one-year rulemaking window to draw lines, and final outcomes will depend on regulators’ definitions and industry input.