Stablecoin deal, Coinbase backing lift Clarity Act odds

Senators reached an agreement Friday to limit interest-like payments on dollar-pegged stablecoins. Coinbase CEO Brian Armstrong urged a committee markup, and Polymarket probabilities for the Clarity Act’s passage in 2026 rose from 46% to 64%.

The draft language would bar payments that are “economically or functionally equivalent” to interest on bank deposits while allowing “rewards or incentives” tied to specific, bona fide activities such as transactions, transfers, remittances and providing liquidity in decentralized finance protocols. The text gives U.S. financial regulators one year to issue rules defining when a payment crosses the line into prohibited interest-like yield.

The agreement resolved a sticking point that stalled progress in January after Armstrong had withdrawn his support on the eve of a scheduled markup. Armstrong later posted “Mark it up,” signaling support for advancing the bill through committee.

Senate Banking Committee Chair Tim Scott wrote on social media that lawmakers were nearing consensus and planning a bipartisan markup in May to advance market-structure legislation. The Senate draft must still be reconciled with a House version that passed nearly a year ago, and lawmakers face a compressed calendar as the election season approaches.

Last year’s GENIUS Act banned stablecoin issuers from paying yield or interest on customer dollars; sponsors cited concerns that higher yields could pull funds away from traditional bank accounts. The Clarity Act is written to close an ambiguity in that law by targeting payments that function like deposit interest, including those offered by third-party crypto firms.

Industry reactions were mixed. Crypto investor Nic Carter posted “The banks won.” Scott Johnsson, general counsel at Van Buren Capital, wrote “This is fine.” 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 forward without delay.

Because the bill relies on a functional test, the regulators’ upcoming rulemaking will determine how the ban is applied in practice. Exchanges, trading platforms and DeFi services are monitoring the language closely because differences in interpretation could affect business models for lending, trading and rewards programs.

If the committee advances the bill, negotiators will need to bridge differences with the House and secure votes in a closely divided Congress. Even with a markup, the timeline for final passage and signature into law remains uncertain given competing legislative priorities and the calendar before the 2024 elections.