CLARITY Act passes the Senate Banking Committee! Stablecoin yields retain room for "activity-based rewards"

The U.S. Senate Banking Committee passes the CLARITY Act, clearly delineating regulatory authority. The bill is moving toward a full Senate vote, establishing a compliant framework for the crypto industry and ending the enforcement-first dilemma.

CLARITY Act clears Senate Banking Committee, marking a key development in U.S. crypto regulation

U.S. cryptocurrency regulation legislation has achieved another significant milestone. On May 14, the U.S. Senate Banking Committee approved the Digital Asset Market Clarity Act, commonly known as the CLARITY Act, with 15 votes in favor and 9 against, officially advancing the bill toward a full Senate vote. The vote received unanimous support from Republican members, with Democratic Senators Ruben Gallego and Angela Alsobrooks also voting in favor, securing limited bipartisan support at the committee level.

Image source: U.S. Senate U.S. Senate Banking Committee votes 15-9 to pass the CLARITY Act

The bill aims to establish clearer regulatory classifications for the U.S. digital asset market, clarifying which tokens are securities and which are commodities, and reassigning regulatory powers between the SEC and CFTC.

For the crypto industry, the long-standing regulatory gray area finally has a chance to be addressed systematically. Over the past few years, U.S. crypto companies have often criticized the SEC’s “enforcement-first” approach, making it difficult for exchanges, token issuers, and investors to determine compliance boundaries; supporters argue that if enacted, the CLARITY Act will provide clearer operational rules for trading platforms, DeFi protocols, custodians, and token issuers.

• Related news: 2026 CLARITY Bill latest summary: registration exemptions, stablecoin passive yields, and more key points

Stablecoin yields become the biggest point of contention, with banks and crypto firms reaching a compromise

The bill’s success hinges on a preliminary compromise between the banking industry and crypto firms regarding stablecoin yields. In recent months, the Senate Banking Committee’s review faced deadlock mainly because the banking sector strongly opposed crypto platforms offering users yields similar to deposit interest.

• Banking industry representatives believe that if Coinbase, exchanges, or other digital asset service providers can allow users to earn rewards simply by holding stablecoins, it would directly compete with bank deposits, potentially leading to a loss of traditional bank savings, which could impact lending capacity and financial stability.
• Crypto industry advocates argue that platforms must retain some reward mechanisms to maintain user engagement, facilitate payments, on-chain liquidity, and network growth.

According to the new version of the bill, it prohibits digital asset service providers and related entities from offering “passive income on stablecoins that is economically or functionally equivalent to bank deposit interest” to U.S. customers, but allows activity-based rewards related to real usage, such as payments, transfers, market making, staking, governance participation, loyalty programs, or platform promotions. Users holding stablecoins in accounts for passive interest will be restricted, but participation in certain on-chain or platform activities may still earn rewards.

This compromise, driven by Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks, is seen as a key arrangement to restart the bill’s progress.

Coinbase and Circle most affected, market begins reassessing stablecoin business models

This stablecoin yield compromise directly impacts Coinbase, Circle, and the entire $USDC ecosystem. Coinbase has historically relied on its partnership with Circle for stablecoin reserve yields and platform rewards as major revenue sources. The market previously reacted strongly to the draft version, which could have severely limited stablecoin yields, causing Circle’s stock price to plummet and prompting Coinbase to withdraw support for the bill.

• Related news: Coinbase opposes the crypto market structure bill! CEO highlights four major flaws: undermining privacy, stifling innovation

The version approved by the committee preserves activity-based rewards, which the crypto industry considers the minimum acceptable outcome. Coinbase Policy Director Faryar Shirzad stated that while the banking industry gained more restrictions on yields, crypto platforms still retain the most critical part—allowing U.S. users to earn rewards based on real platform and network activity.

Image source: X/@faryarshirzad Coinbase Policy Director Faryar Shirzad states that the banking industry gained more yield restrictions, but crypto platforms retain the most important part

Following the bill’s passage, the market responded quickly, with Coinbase’s stock price rising temporarily. Investors see reduced regulatory uncertainty as beneficial for large compliant exchanges to expand their operations. However, the bill still requires the SEC, CFTC, and U.S. Treasury to jointly develop rules within a year to further define which rewards are permissible and which designs might be considered evading bank deposit interest restrictions. How platforms will design $USDC rewards, DeFi yield mechanisms, and trading incentive schemes will depend on subsequent regulatory interpretations.

The bill still needs full Senate approval, with ongoing debates over DeFi and political controversies

Although the CLARITY Act has passed the Senate Banking Committee, several hurdles remain before it becomes law. The next step is for the bill to be reviewed by the full Senate, then reconciled with the versions passed by the Senate Agriculture Committee and the House of Representatives before potentially being sent to the President for signing.

Some Democratic lawmakers remain skeptical, mainly over AML, sanctions enforcement, DeFi regulation, protections for software developers, and ethical concerns about government officials and presidential family members profiting from the crypto industry. Even though Ruben Gallego and Angela Alsobrooks voted in favor at the committee stage, they may request further amendments before the full Senate vote.

Republicans aim to push the bill before the November midterm elections to prevent legislative delays caused by changing congressional majorities.

• For the crypto industry, this vote represents the closest moment in years to establishing a comprehensive market structure law.
• For the banking sector, the stablecoin yield restrictions serve as a crucial line of defense to protect deposit bases.

Overall, the regulatory direction indicates that the U.S. attitude toward digital assets is gradually shifting from strict enforcement to establishing clear market rules and institutional frameworks.