Senators Strike Stablecoin Yield Deal; Coinbase Backs Clarity Act

Senators reached an agreement Friday to ban stablecoin payments that are “economically or functionally equivalent” to interest on bank deposits. The proposal would bar issuers and related firms from offering interest-like yield on dollar-pegged stablecoins while allowing rewards tied to specific activities.

The draft directs U.S. financial regulators to publish rules within one year to clarify when rewards cross into prohibited interest-like payments. It preserves a compromise that separates passive yield from activity-based incentives for transactions, transfers, remittances and providing liquidity in decentralized finance protocols.

The deal follows last year’s legislation that banned stablecoin issuers from paying yield. Banks had argued depositors could move funds into higher-yielding stablecoin products, and some lobbied to close a perceived gap that might let exchanges or third parties offer interest-style returns. The Clarity Act text defines prohibited payments by their economic or functional equivalence to bank deposit interest.

Coinbase CEO Brian Armstrong posted “Mark it up,” indicating support for advancing the bill to a committee vote. A prediction market, Polymarket, showed the Clarity Act’s passage odds rise from 46% to 64% after the endorsement.

Reactions in the crypto community varied. Investor Nic Carter wrote, “The banks won.” Scott Johnsson, general counsel at Van Buren Capital, described the result as acceptable and added, “It may not feel like it, but it is.” Summer Mersinger, chief executive of the Blockchain Association, said resolving the yield question clears the path to a Senate Banking Committee markup and urged the committee to move quickly.

Senate Banking Committee Chair Tim Scott wrote on social media that lawmakers were making progress and working on a bipartisan markup. Negotiators aim to hold a committee vote in the coming weeks, though timing will depend on committee scheduling and reconciling the Senate draft with a House bill passed nearly one year ago.

If enacted and reconciled with the House version, the Clarity Act would assign regulators responsibility for defining acceptable practices for how exchanges, wallet providers and DeFi platforms structure incentives and products. Industry groups and firms are watching the rulemaking timeline closely because regulators’ interpretations will determine which promotional and loyalty programs remain permitted.