Clarity Act Text Allows Crypto Firms to Offer Stablecoin Rewards While Protecting Bank Yields
By Nikhilesh De and Jesse Hamilton | Updated May 1, 2026
A newly released draft of the Clarity Act—the proposed legislation governing stablecoins and digital assets—provides a significant compromise between the cryptocurrency industry and traditional banks. The text, unveiled on May 1, 2026, by members of the Senate Banking Committee, enables cryptocurrency companies to continue offering stablecoin-based reward programs while prohibiting yield products that resemble traditional bank deposit interest.
Key Provisions and Impact
The Clarity Act draft, negotiated over months by Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.), clearly prohibits crypto firms from paying interest or any form of yield on stablecoin holdings that is economically or functionally equivalent to what banks provide through interest-bearing deposits. This move aims to protect depository institutions that are integral to the U.S. economy from competition by crypto stablecoin issuers offering similar financial services.
Specifically, the bill text states:
"No covered party shall, directly or indirectly, pay any form of interest or yield (whether in cash, tokens, or other consideration) to a restricted recipient solely for holding payment stablecoins, or on a payment stablecoin balance in a manner economically or functionally equivalent to bank deposit interest."
Importantly, the legislation does allow stablecoin issuers to provide incentives based on “bona fide activities or bona fide transactions” that differ from traditional yield generated by bank deposits. This approach permits crypto companies to reward genuine participation and activity on their platforms—akin to financial firms offering rewards based on credit card usage—while banning simple “buy and hold” interest schemes.
Industry and Regulatory Perspectives
Coinbase, one of the largest cryptocurrency exchanges and a key stakeholder in the negotiations, responded positively to the new language. Coinbase CEO Brian Armstrong urged the Senate Banking Committee to move forward with a markup session, signaling readiness to advance the legislation. Coinbase’s Chief Legal Officer, Paul Grewal, emphasized that the bill preserves the ability to offer activity-based rewards, aligning with what bank lobbyists sought to prevent.
The draft also delegates rulemaking authority to the Treasury Department and Commodity Futures Trading Commission (CFTC), mandating them to issue detailed regulations within one year of the bill’s enactment. This rulemaking will clarify how crypto firms can structure yield offerings, including factors like account balances, reward durations, and types of qualifying activities.
Corey Frayer, director of investor protection at the Consumer Federation of America, explained that these provisions allow regulators flexibility in defining legitimate yield activities and preventing potential evasion.
Background and Legislative Progress
Negotiations on the Clarity Act’s stablecoin provisions have been ongoing since the Senate Banking Committee postponed its markup in January 2026. The discussions, facilitated by the White House and bipartisan efforts between Senators Tillis and Alsobrooks, have sought to strike a balance that supports innovation in digital assets while safeguarding traditional banking interests.
The agreement to prohibit deposit-like yield but allow transaction-based rewards represents a major step toward resolving one of the final hurdles before the bill can advance through the Senate.
Digital Chamber CEO Cody Carbone welcomed the clarification, calling it “an important step toward resolving one of the final issues standing between the Committee and a markup,” and affirmed continued advocacy for reward programs to enhance consumer utility, competition, and innovation in the digital asset space.
What’s Next?
With the release of this compromise language, the Clarity Act is poised to proceed to a Senate Banking Committee markup session. While several other negotiation points remain unsettled publicly, the resolution on stablecoin yield is widely viewed as a breakthrough that could accelerate the bill’s legislative progress.
The bill’s ultimate passage will likely shape stablecoin market operations in the United States, influencing crypto firms’ product offerings and interactions with federal financial regulators for years to come.
For ongoing updates on crypto policy and the Clarity Act, stay tuned to CoinDesk.