Clarity Act Bars Stablecoin Yield on Reserves, Preserves Activity Rewards
COIN•The U.S. Senate introduced compromise language in the Clarity Act prohibiting stablecoin issuers from paying yield on reserves while allowing activity-based rewards. Coinbase Global supported the change, which now heads to the Senate Banking Committee ahead of detailed Treasury and CFTC rulemaking within one year.
1. Senate Proposes Yield Restrictions for Stablecoins
The Senate's Clarity Act compromise language bars stablecoin issuers from offering interest-like yield on reserves but allows activity-based reward incentives, balancing concerns of bank lobbyists and crypto firms. It specifically prevents firms such as Circle Internet Group from paying deposit-style yields while aligning stablecoins with traditional financial regulations.
2. Coinbase Endorses Compromise, Industry Implications
Coinbase Global publicly signaled support for the compromise, seeing preserved activity programs as essential for user engagement on its trading and custody platforms. Banks had argued that stablecoin yield would draw deposits from interest-bearing savings accounts, but the compromise should alleviate bank resistance while maintaining crypto incentives.
3. Legislative and Regulatory Timeline Ahead
Following the Senate Banking Committee review, the U.S. Treasury and CFTC will have one year post-enactment to draft detailed rules defining permissible stablecoin activities. This timeline sets a clear regulatory roadmap for cryptocurrency firms to develop products compliant with federal guidelines.
