Senators Release Stablecoin Yield Compromise, Clearing a Path for the Clarity Act

The single issue that has kept America’s crypto market structure bill stuck in a Senate committee since January finally has a written answer. On Friday evening, Senators Thom Tillis, a North Carolina Republican, and Angela Alsobrooks, a Maryland Democrat, released compromise language on stablecoin rewards for the Digital Asset Market Clarity Act, and the crypto industry spent Saturday urging the Senate Banking Committee to schedule a vote.

The text, first reported by Punchbowl News, arrives after months of negotiations involving the White House, the banking lobby and Coinbase, the largest U.S. crypto exchange. Coinbase signalled almost immediately that it can live with the result. Chief executive Brian Armstrong posted a two-word reply on X: “Mark it up.”

What the compromise says

The new language, described as Section 404 of the bill, targets what lawmakers call “covered parties”: digital asset service providers and their affiliates. Those firms would be barred from paying U.S. customers interest or yield simply for holding a payment stablecoin. The ban also reaches any payment on a stablecoin balance that is “economically or functionally equivalent” to interest on a bank deposit.

Stablecoin issuers themselves are excluded from this section, because last year’s GENIUS Act already prohibits them from paying interest directly. The fight was always about the platforms that sit between issuers and users, and about the rewards those platforms hand out.

The key carve-out covers rewards tied to “bona fide activities or bona fide transactions.” According to CoinDesk, the text compares this kind of incentive to credit card rewards, and it requires regulators, including the Treasury Department and the Commodity Futures Trading Commission, to begin rulemaking within a year of the bill becoming law to spell out when activity-based rewards are allowed. The Block reports that the permitted activities are expected to include payments, transfers, market-making, staking, governance and loyalty programs, and that rewards may still be calculated by reference to a balance, duration or tenure.

The section adds consumer guardrails as well. Covered firms could not market stablecoins as investment products, claim they carry the full faith and credit of the United States, or suggest they are FDIC insured. Treasury could impose civil penalties of up to $5 million per violation, according to The Block. Federal banking regulators would also have to report to Congress within two years on how dollar stablecoins are affecting bank deposits.

Who gave ground

Both sides can point to wins. Banks have argued for more than a year that yield-bearing stablecoins could pull deposits out of the banking system and reduce lending. The prohibition on deposit-like interest answers that concern directly, and the required deposit report gives banks a formal route to revisit the issue later. Coinbase chief policy officer Faryar Shirzad acknowledged on X that “the banks were able to get more restrictions on rewards.”

Crypto firms, meanwhile, keep the ability to pay incentives tied to real use of their platforms. Coinbase chief legal officer Paul Grewal said the language “preserves activity-based rewards tied to real participation on crypto platforms and networks.” One crypto company employee told CoinDesk the rules would push the industry from a “buy and hold” model toward “buy and use.”

Not everyone in the industry is fully satisfied. Ji Hun Kim, chief executive of the Crypto Council for Innovation, said the language goes well beyond the GENIUS Act by applying to all digital asset market participants rather than only issuers, and he disputed the argument that stablecoin growth drains bank deposits. Even so, his group asked the committee to proceed. Consumer advocates raised a different worry: Corey Frayer of the Consumer Federation of America suggested the rulemaking wording could let firms run activities and simply pass returns back to customers.

Why this matters to crypto readers

The money at stake is significant. Coinbase reported $1.35 billion in stablecoin revenue for 2025, much of it linked to its USDC partnership with Circle, according to The Block. Rewards on USDC balances have been one of the exchange’s most visible features, and the shape of that program now depends on rules Treasury and other regulators would write after the bill passes.

The broader stakes are larger still. The Clarity Act is meant to divide oversight of digital assets between the Securities and Exchange Commission and the CFTC and give exchanges, brokers and token projects a clear federal rulebook. The House passed its version 294 to 134 last July, and the Senate Agriculture Committee advanced its portion along party lines in January. The Senate Banking Committee’s piece has been stalled since a planned January markup was cancelled after Coinbase withdrew support over earlier yield language. Circle shares fell sharply in March when another draft ran into trouble.

Industry groups lined up behind the text within hours. Blockchain Association chief executive Summer Mersinger commended the two senators, and Circle chief strategy officer Dante Disparte said the deal “marks meaningful progress in the CLARITY Act negotiations.” Markets were steady to firm: bitcoin traded above $78,000 on Saturday, according to CoinDesk market coverage.

What comes next

Committee chair Tim Scott has not yet announced a markup date. Yield was the most contentious issue, but it is not the only one. A spokesperson for Senator Alsobrooks has said ethics provisions and illicit finance language still need resolution, and DeFi treatment remains under discussion. Tillis has also said enforcement is an area still being worked on.

Time is a factor. Senator Bernie Moreno warned in March that if market structure legislation does not pass by May, it may not pass “for the foreseeable future,” with midterm elections approaching. Friday’s text removes the largest obstacle, but the bill still needs a committee vote, a merged Senate version, floor time and a final agreement with the House. For now, the industry has what it asked for: a document both crypto firms and senators say they can work from.