The future of stablecoin yield is in limbo as the Senate drafts the CLARITY Act, a piece of legislation that could reshape the crypto industry’s landscape. The revised Digital Asset Market Clarity Act, unveiled in a closed-door Capitol Hill session, aims to ban passive yield on stablecoin balances while permitting rewards tied to user activities such as trading or payments.
Breaking Down the CLARITY Act
The CLARITY Act’s latest draft, which was shared with industry participants, proposes a clear distinction between passive and activity-based rewards. According to sources familiar with the draft, the bill would prohibit platforms from offering yield ‘directly or indirectly’ for holding stablecoins, a move that has sparked significant debate within the industry. Eleanor Terrett, a journalist and host at Crypto America, noted that the draft is a ‘departure’ from previous discussions with the White House, with the ‘economic equivalence’ standard being particularly vague.
The Industry’s Reaction
The crypto industry, particularly platforms like Coinbase, has been vocal about the importance of stablecoin yield as a core feature. However, the banking sector has consistently argued that such programs mimic traditional bank deposit accounts and could siphon funds away from the banking system. The compromise, reached on March 20 by Sens. Thom Tillis and Angela Alsobrooks with White House backing, blocks yield tied to balances but allows incentives linked to user behavior.
Regulatory Uncertainty
The bill’s provision to defer the details of activity-based rewards to regulators leaves a significant gray area. The Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Treasury have been given one year to establish detailed rules. This ambiguity is problematic for an industry that thrives on precision in code and contracts. For banks, the framework is a win as it protects traditional savings products from direct competition with stablecoin accounts.
Legislative Hurdles Ahead
While the CLARITY Act has been years in the making and already cleared the House with bipartisan support in July 2025, the issue of stablecoin yield has proven to be a sticking point. A January Senate draft that banned yield outright led Coinbase CEO Brian Armstrong to withdraw support, derailing a planned committee vote. The latest compromise revives the bill’s momentum, but it still faces committee markup, a full Senate vote, reconciliation with competing versions, and ultimately a presidential signature.
Looking Forward
The CLARITY Act’s passage is not guaranteed, and the crypto industry remains on edge. The bill’s focus on stablecoin yield is just one of many unresolved issues, including debates over decentralized finance (DeFi) oversight, anti-money laundering rules, and ethics provisions. The message from Washington is clear: earning yield just for holding stablecoins is off the table, but the details of what will replace it are still a work in progress. As the legislative process unfolds, the industry will be closely watching for any further developments that could shape the future of stablecoin rewards.
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