Senators Agree Stablecoin Yield Ban; Coinbase Backs Markup

Senators reached a draft agreement to bar stablecoin payments that are “economically or functionally equivalent” to interest on bank deposits, and Coinbase CEO Brian Armstrong posted “Mark it up,” signaling support for a Clarity Act committee markup. The development was reported Friday and quickly shifted expectations for the bill’s passage.

The draft text would prohibit interest or yield on stablecoins that mirror payments on interest-bearing bank deposits while allowing “rewards or incentives” tied to bona fide activities such as transactions, transfers, remittances or providing liquidity. The measure would give U.S. financial regulators one year to publish rules defining when stablecoin rewards cross the line into prohibited interest.

The compromise is intended to clarify language left open by last year’s GENIUS Act, which banned stablecoin issuers from paying yield but did not specify whether third-party platforms could offer interest-like products.

Coinbase CEO Brian Armstrong withdrew his support for the bill in January, prompting Senate Banking Committee Chair Tim Scott to postpone a scheduled markup and send negotiators back to the table. After the Friday agreement and Armstrong’s apparent change of posture, prediction markets raised the estimated chance the Clarity Act will pass in 2026 from about 46% to roughly 64%.

Reactions across the crypto industry varied. Crypto investor Nic Carter posted, “The banks won.” Scott Johnsson, general counsel at Van Buren Capital, described the agreement as acceptable, writing, “This is fine.” 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 move forward quickly. Chair Tim Scott wrote on social media that the committee is “making real progress” and is “nearing consensus.”

Key elements of the draft remain vague. Lawmakers left the task of drawing a clear line between allowed rewards and banned interest to federal regulators. The text targets payments that are “economically or functionally equivalent” to bank deposit interest but does not specify precise tests for that equivalence.

Banks lobbied for tighter rules, saying higher-yielding stablecoins could pull deposits from traditional checking and savings accounts. The Clarity Act would extend restrictions to prevent third-party platforms from offering passive yield that approximates bank interest.

If the Senate Banking Committee proceeds with a markup, the Senate still will need to reconcile its version with a House bill passed nearly a year ago. The legislative calendar could tighten as the election season advances.

The one-year regulatory timeline means firms that offer yield-like stablecoin products will face a period of uncertainty while rules are developed. Those firms may need to change product features or adopt new compliance approaches depending on how regulators interpret the statutory language and issue implementing guidance.