REGULATION | The U.S CLARITY Act Reportedly Gets Clarity Following a Deal on Stablecoin Yield

U.S. lawmakers have finalized a compromise on stablecoin yield rules under the proposed ‘Clarity Act,’ a key breakthrough that could accelerate progress on landmark cryptocurrency legislation, according to industry reports.

The agreement draws a clear distinction between prohibited ‘passive’ returns and permitted activity-based rewards, effectively barring stablecoin issuers and platforms from offering interest-like payments simply for holding tokens.

The new language introduces requirements for crypto companis to ofer rewards tied to stablecoins with a broad prohibition on rewards offered ‘in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.’

Under the compromise, users may still earn incentives tied to actions such as payments, transfers or other on-platform activity, a provision aimed at preserving innovation while addressing concerns from traditional banks over deposit competition.

Speaking on this development, the Chief Policy Officer at Coinbase, Faryar Shirzad, said:

“In the end, the banks were able to get more restrictions on rewards, but we protected what matters – the ability for Americans to earn rewards, based on real usage of crypto platforms and networks.

We also ensured the US can be at the forefront of the financial system – which in this competitive geopolitical era is paramount.”

The yield debate had been the main obstacle delaying the Digital Asset Market Clarity Act which seeks to establish a comprehensive regulatory framework for cryptocurrencies in the United States.

Industry participants and lawmakers signaled the deal could pave the way for a Senate Banking Committee markup in the near term, with some calling it a ‘go time’ moment for the bill after months of negotiations.

Prediction markets show improving sentiment around the legislation’s prospects, though uncertainty remains as the bill navigates political and industry opposition ahead of potential passage later this year.

For a while, banks have argued that stablecoin rewards could limit the industry and lending since they are not similar to interest-bearing bank deposits hence the proposal to base yield on activities over balances.

The Clarity Act, a broader market structure bill for digital assets, has been stalled in the Senate for months with disagreements over stablecoin yield among the key sticking points.

Based on the latest developments, it looks like the banks were indeed ‘able to get more restrictions on rewards,’ according to Coinbse legal officer.

Stay tuned to BitKE on crypto regulation globally.

Join our WhatsApp channel here.

Follow us on X for the latest posts and updates

Join and interact with our Telegram community

___________________________________________