Banks Stay Tight-Lipped as Senators Reveal Proposed Clarity Act Stablecoin Deal

Senators unveiled a Clarity Act compromise on the subject of stablecoin rewards. Crypto seems happy enough, but what about the banks?

In brief

• Senators unveiled a Clarity Act compromise on the subject of stablecoin rewards.
• The language would ban rewards on stablecoin deposits but allow rewards tied to staking or governance.
• While Coinbase supports the plan, banks remain silent and are expected to oppose loopholes that mimic yield.

Crypto industry leaders mostly celebrated over the weekend as lawmakers unveiled a solution to a dispute that has plagued the Clarity Act, a major crypto bill, for months—but questions abound about whether the proposed compromise will be seen as such by the banking industry.

On Friday, Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) unveiled new Clarity Act language pertaining to rewards offered by crypto companies on holdings of stablecoins, cryptocurrencies pegged to the value of the U.S. dollar.

The Clarity Act would formally legalize most types of crypto activity in the United States, and has been at the top of the industry’s policy wish list for years.

For several months now, the banking lobby and the crypto industry have battled it out over stablecoin rewards—which banks see as a threat to traditional, low-yield savings accounts, and crypto firms argue were already legalized last year in the stablecoin-focused GENIUS Act.

And while key crypto stakeholders have given the proposed compromise their blessing, banking-side negotiators have stayed notably silent.

The new stablecoin yield compromise between the two camps would prohibit the payment of rewards on stablecoins in a manner that is “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”

That language would mean no rewards on stablecoin deposits—but, potentially, rewards on stablecoin transactions and other types of account activity.

Friday’s proposal would task regulators and the Secretary of the Treasury with creating a list of permissible reward categories after the Clarity Act’s passage. Per the new legislative language, that list could include rewards tied to participation in governance, validation, and staking. Further, such rewards could be calculated by referencing a user’s account balance.

What does that all mean? Lots of policy leaders have lots of opinions. One DC insider told Decrypt that the banks are likely to balk at the potential exception for staking-related activity and the ability for such rewards to reference account balances.

Other digital asset policy leaders argued, in contrast, that the language meaningfully constrains crypto firms’ ability to offer rewards directly on stablecoin holdings—given such programs were not prohibited by the GENIUS Act and had been in place for years. Coinbase, for example, had for years offered upwards of 5% yield on holdings of the USDC stablecoin to all customers, but more recently limited the program to paid subscribers.

Coinbase—which walked away from the Clarity Act in January over frustrations about potential stablecoin yield restrictions—signaled its support for the proposed compromise on Friday.

“We protected what matters—the ability for Americans to earn rewards, based on real usage of crypto platforms and networks,” Coinbase chief policy officer Faryar Shirzad said in a post on X.

Coinbase CEO Brian Armstrong signaled his support for the language as well, urging the Senate Banking Committee to proceed with a months-delayed vote on the legislation.

But the banks have remained quiet about the language and have not signaled their support. Major bank trade groups spent much of last week lobbying the Treasury Department to significantly increase its restrictions on stablecoin yield as it begins to implement the GENIUS Act. 

The American Bankers Association, one of the lead bank-side negotiators on the Clarity Act, said last week that crypto firms must not only be barred from offering yield on stablecoin deposits directly, but also from “allow[ing] yield-like benefits to reach stablecoin holders indirectly.”

The bankers’ group also sought to root out “cosmetic structuring designed to replicate yield.”

Though the banking and crypto lobbies have gone back and forth on the question of stablecoin yield for months, time is now beginning to run out. Tim Scott (R-SC), the chair of the Senate Banking Committee, said he plans to schedule a vote on the Clarity Act this month.

The Committee is only in session for two weeks in May, and given the upcoming midterm elections, pro-crypto senators have urged that if the bill does not pass this month, “digital asset legislation will not pass for the foreseeable future.”

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