Senators Strike CLARITY Act Deal Limiting Stablecoin Yields

Senators Thom Tillis and Angela Alsobrooks announced a bipartisan compromise on the Digital Asset Market Clarity Act of 2025 in early May. The agreement focuses on limits to yields offered on stablecoins held by U.S. customers.

Section 404 of the CLARITY Act would prevent digital asset service providers from paying interest or yield to U.S. customers solely for holding stablecoins. The provision also bars rewards that are functionally or economically comparable to bank deposit interest while permitting rewards that are directly tied to active platform use.

In a joint statement, the senators described the package as a “substantially improved, consensus‑based product” and said the compromise addresses their primary concern about deposit flight from the banking system. They added that industry participants “have had a seat at the table and have been directly sharing their feedback and ideas for months to inform the final product.”

Banking groups have pushed for a clearer, broader ban on yield‑bearing stablecoins. Those groups cited a study they say shows yield‑earning stablecoins could reduce consumer, small business and farm loans by at least one‑fifth and argued the proposed language falls short of preventing deposit outflows.

Supporters in the crypto sector and some lawmakers backed the compromise. Senator Cynthia Lummis called the bipartisan text “the culmination of months of hard work to deliver a compromise on yield we can all live with.” Senate Banking Committee Chairman Tim Scott expressed optimism that the measure could clear the Senate before the August recess.

If enacted, the CLARITY Act would aim to close a perceived loophole left by earlier legislation that barred stablecoin issuers from paying interest but allowed other parties to offer yield. The new text focuses on the economic effect of rewards rather than only on who pays them.

Market indicators tracked increased confidence in the bill’s passage. A prediction market put the odds of approval at about 70 percent, up roughly 24 percentage points over the prior week. Lawmakers involved said the compromise was reached to avoid further delays in finalizing stablecoin rules and to move toward a final vote in the coming weeks.