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

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 to paid subscribers.