CLARITY Act finalizes stablecoin yield rules, crypto bill advances

The U.S. CLARITY Act appears poised to clear a major hurdle as lawmakers publish the final text addressing stablecoin yields. Coinbase chief legal officer Faryar Shirzad welcomed the development, saying it moves the industry closer to regulatory clarity after Senators Thom Tillis and Angela Alsobrooks released the last version aimed at settling a long-running dispute over whether stablecoin yields could undermine the competitiveness of the banking system.

In a post on X, Shirzad declared, “It’s time to get CLARITY done.” He noted that while banks won added restrictions on rewards, the measure preserves Americans’ ability to earn rewards tied to real usage of crypto platforms and networks. The draft text is framed around the SEC’s 404 provision, titled “Prohibiting interest and yield on payment stablecoins,” which would bar crypto firms from paying any form of interest or yield to holders of stablecoins simply for holding them.

Key takeaways

• The final CLARITY Act text targets stablecoin yields directly, prohibiting interest or yield on payment stablecoins while allowing rewards linked to genuine activity on crypto platforms.
• Industry voices are split: proponents argue the framework provides much-needed clarity, while some players worry banks will press for even tighter restrictions on rewards.
• Market sentiment around the bill has shifted, with prediction markets pricing in a roughly 55% chance of the act becoming law in 2026, up from earlier levels.
• Observers expect a Senate Banking Committee markup to occur imminently, potentially accelerating congressional action despite ongoing banking industry opposition.
• Key political signals point to active congressional momentum, with several lawmakers urging lawmakers to advance the bill without delay.

How the text reshapes stablecoin incentives

The crux of the draft revolves around a categorical ban on distributing interest or yield to stablecoin holders solely for holding the asset. The provision, labeled as SEC 404, would treat payments that resemble a bank deposit as prohibited, constraining the ability of stablecoin issuers and exchange-like platforms to offer high-yield incentives that could compete with traditional banks.

Still, the text carves out a pragmatic exception: rewards could be offered if they reflect bona fide activities. In practical terms, traders leveraging on-chain activity, transaction volume, or network usage could potentially receive rewards tied to real participation rather than passive holding. This nuance is seen as a balance between consumer incentives and financial stability considerations that banks have long argued could be undermined by yield-rich crypto products.

Industry voices have debated the nuance. Mert Mumtaz, CEO of Helius Labs, summed up a common sentiment: the policy would “clarify” the playing field by preventing risk-free yield on dollars without engaging a bank-like infrastructure. His comment reflects a broader concern among some crypto executives that the line between rewarding activity and yield-bearing mechanisms remains delicate and closely watched by policymakers.

From policy to markets: what investors should watch

Beyond the text itself, market participants are parsing the political and regulatory signals. The developer-facing question is whether the prohibition on yield will dampen the appeal of stablecoins as programmable money or merely push innovation toward activity-based rewards that fit within the new framework. For investors and builders, the distinction matters: a ruleset that favors transparency and objective usage data could reduce regulatory risk over time while still allowing meaningful consumer incentives aligned with platform usage.

Prediction markets reflected the evolving sentiment. Polymarket traders currently assign about a 55% probability that the CLARITY Act will be signed into law in 2026, reflecting a positive but not definitive trajectory. The market’s view underscores a broader expectation that, despite resistance from certain banking interests, the bill’s momentum could translate into legislative action within a reasonable horizon.

Industry leaders have begun calling for stronger legislative momentum. Coinbase CEO Brian Armstrong, weighing in on the development, urged lawmakers to “mark it up”—a shorthand for moving the bill through committee work and toward a floor vote. The push signals a preference within the industry for rapid progress, even as lawmakers assess the competing concerns raised by traditional banks about financial stability and competitive integrity.

Next steps: timing, opposition, and the markup window

Political forecasts suggest that the Senate Banking Committee could schedule a markup “imminently,” according to market observers closely tracking congressional timing. Alex Thorn, head of firmwide research at Galaxy Digital, noted that the release of the final text increases the likelihood that committee action could occur the week of May 11, while cautioning that opposition from banks is likely to intensify as the proposal moves forward.

The bill’s path remains intertwined with banking sector concerns. Thorn warned that banks could ramp up their opposition efforts if the framework gains momentum, potentially shaping amendments or tightening measures during the markup. The tension between crypto innovation and bank-focused risk controls remains a central dynamic in the bill’s journey through Congress.

On the political calendar, several lawmakers have signaled urgency. Senator Bernie Moreno has suggested he expects the CLARITY Act to be enacted by the end of May, while Senator Cynthia Lummis indicated the moment is now or never for major crypto legislation. These statements, paired with Tillis and Alsobrooks’ publication of the final text, position the CLARITY Act as a potential milestone in the broader effort to legalize and regulate the digital-asset sector in a comprehensive way.

As the process unfolds, observers will be watching for not only the markup but also the precise language surrounding “bona fide activities” and how regulators might interpret and enforce those provisions. The balance between incentivizing consumer participation and preventing risk-free yields remains at the heart of the debate, and the outcome could set a precedent for how the U.S. approaches other crypto-financial products in the future.

Why this matters for the crypto landscape

For investors and builders, the CLARITY Act represents more than a legislative milestone; it signals a potential framework in which stablecoins can operate under a clearer, more predictable set of rules. If the final law preserves the ability to offer activity-based rewards while eliminating pure yield for holders, it could create a path for ongoing innovation that aligns with prudential financial oversight. The emphasis on real usage data and on-chain activity as a basis for rewards could also encourage exchanges and wallet providers to strengthen transparency and compliance measures, potentially improving consumer protection and market integrity over time.

Still, the negotiations illustrate the ongoing tug-of-war between crypto innovation and traditional banking interests. Even with a favorable final text, the regulatory environment will likely continue to evolve, with future amendments, enforcement guidance, and potential state-level adaptations factoring into how firms design products and how users interact with stablecoins.

As the legislative clock ticks, market participants should monitor the markup schedule, any revisions to the bona fide activity criteria, and the broader political discourse around crypto regulation. The balance struck in this bill could shape the pace of stablecoin adoption, the feasibility of reward-driven user engagement, and the overall risk calculus that financial institutions apply to digital assets in the coming years.

Readers should stay attentive to further updates on the markup timeline, potential amendments, and the administration’s stance on crypto regulation as Congress weighs the CLARITY Act’s final form and its implications for the evolving crypto economy.

This article was originally published as CLARITY Act finalizes stablecoin yield rules, crypto bill advances on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.