Tillis, Alsobrooks Agree to Ban Bank‑Like Yield on Stablecoins

Senators Thom Tillis (R‑N.C.) and Angela Alsobrooks (D‑Md.) finalized compromise language for Section 404 of the CLARITY Act on May 1–2, 2026. The text prohibits stablecoin yields that are economically or functionally equivalent to interest on a bank deposit and permits rewards tied to genuine platform use.

The provision extends the ban beyond issuers to cover all digital asset market participants. It bars passive, deposit‑style yield while preserving rewards linked to so‑called bona fide activities such as payments, network participation, platform transactions and other real user behavior.

The Treasury Department and the Commodity Futures Trading Commission must publish implementing rules and a list of permissible reward activities within 12 months of enactment. Regulators will be able to evaluate factors including holding period, balance size, reward structure and the type of user activity when determining whether a program is permitted.

Lawmakers and industry negotiators had been working for months after a Senate Banking Committee markup was postponed in January 2026. The GENIUS Act, enacted in July 2025, barred issuers from paying direct interest but left a gap around how exchanges and affiliated platforms might offer yield‑like returns; the CLARITY Act language closes that gap by applying the prohibition across the market while allowing activity‑based incentives.

The crypto industry reacted quickly. Coinbase CEO Brian Armstrong posted on X: “Mark it up.” Coinbase’s chief legal officer wrote that the compromise preserves activity‑based rewards and minimized prior public concerns. Circle Chief Strategy Officer Dante Disparte endorsed the agreement, citing USDC’s role in cross‑border payments and commerce. Blockchain Association CEO Summer Mersinger praised the senators and warned that regulatory uncertainty can push firms and talent overseas. The Crypto Council for Innovation offered a cautious endorsement and urged the committee to advance the bill.

Market observers expect the Senate Banking Committee to schedule a markup soon. Alex Thorn, head of firmwide research at Galaxy Digital, estimated the committee could meet as early as the week of May 11, 2026. Traders on prediction markets pushed the implied probability that the CLARITY Act will become law in 2026 to roughly 68 percent after the text was released.

Remaining legislative negotiations will address jurisdictional lines between the SEC and the CFTC, token classification, safe harbors for decentralized finance, staking protections and capital formation rules. Sponsors say resolving the stablecoin yield provision removes the last major publicly unresolved issue and could allow the committee to move the bill forward.