Clarity Act Text Bans Yield for Holding Stablecoins

TLDR

• The updated Senate draft prohibits earning yield simply by holding stablecoin balances.
• Rewards are permitted only for specific user actions, not for possessing tokens.
• Banking organizations advocated for restrictions to prevent stablecoin offerings from mirroring bank deposits.
• Industry stakeholders examined the revised wording during a private meeting on Capitol Hill.
• The draft introduces ambiguity regarding how issuers can calculate rewards based on user activity.

(SeaPRwire) –   Lawmakers have circulated an updated Senate draft that restricts stablecoin yield payments under the Digital Asset Market Clarity Act. The draft prohibits rewards for holding balances and limits other incentive programs. Industry representatives reviewed the text during a private session on Capitol Hill this week.

Crypto Clarity Bill Restricts Stablecoin Reward Programs

Senators Angela Alsobrooks and Thom Tillis released the revised language on Friday. The draft forbids issuers from providing yield for merely holding a stablecoin balance. It also prohibits any structure that resembles a traditional interest-bearing bank deposit.

Industry participants reviewed this section on Monday during a closed-door meeting in Washington. A source familiar with the draft described the language as “overly narrow and unclear.” The source further stated that the bill creates uncertainty about how issuers can calculate rewards tied to user activity. Lawmakers are aiming to resolve concerns that previously halted a Senate Banking Committee hearing.

Banking groups had argued that stablecoin rewards should be distinct from deposit interest. They contended that similar products could undermine bank lending and constrict credit markets. Consequently, negotiators developed a compromise that allows rewards linked to user activities but not to balances.

The draft imposes additional limitations on other incentive structures associated with stablecoin programs. However, the text does not specify the exact methods for calculating approved rewards. Lawmakers have not yet scheduled a public markup session in the Senate Banking Committee.

Legislative Progress Continues Amidst Ongoing Oversight Debates

The House of Representatives passed a similar version of the Clarity Act last year. In a separate development, the Senate Agriculture Committee advanced another version following a markup session. The Banking Committee’s review remains the next crucial step before a full Senate vote.

Lawmakers are continuing to negotiate other outstanding provisions of the bill. Democrats have pushed for explicit oversight rules for decentralized finance platforms. They have also sought safeguards against illicit finance risks within digital asset markets.

Some Democrats have proposed prohibiting senior government officials from profiting from cryptocurrency ventures. This provision is intended to address potential conflicts of interest, particularly concerning President Donald Trump. Negotiators have not yet released final language addressing this proposal.

The cryptocurrency sector previously achieved a legislative success with the GENIUS Act. This law established federal standards for certain stablecoin issuers and was described by lawmakers as the initial phase of a broader regulatory framework.

Industry representatives are now awaiting the final decision from the Senate Banking Committee on the revised draft. The closed-door review represented the first opportunity for industry stakeholders to examine the stablecoin yield provisions. Lawmakers are continuing their discussions as they prepare for the next formal hearing.