Coinbase this week voiced firm opposition to the latest Senate stablecoin yield compromise draft tied to the CLARITY Act, Punchbowl News reported. The rejection effectively stalls what was seen as a rare bipartisan window to move the bill forward. Senators Thom Tillis and Angela Alsobrooks circulated the updated text, which bans passive yield on stablecoin balances while permitting activity-based rewards under an economic equivalence standard.
Draft Details: Passive Yield Banned, Activity-Based Rewards Allowed
The proposed rules apply an economic equivalence test to differentiate reward structures. Passive earnings—such as interest on idle stablecoin holdings—are prohibited outright, whereas rewards tied to user actions like trading or staking remain permissible. The draft also restricts access to transaction size data, raising privacy and competitive concerns for Coinbase. The exchange had previously opposed an earlier version during the Senate Banking Committee markup in January, which was later postponed after pushback from Coinbase and other crypto stakeholders. White House meetings earlier this year failed to resolve the impasse.
Market Impact: $1.35 Billion Revenue at Risk
Coinbase reported $1.35 billion in stablecoin-related revenue for 2025, primarily from its USDC distribution partnership with Circle. Mizuho analysts flagged the legislative stalemate as a key factor behind recent share declines for both Coinbase and Circle. The stocks moved in tandem with news flow around the CLARITY Act discussions, reflecting investor sensitivity to regulatory outcomes.
Industry Divide: Banks vs. Crypto on Deposit Competition
Traditional banks argue that stablecoin yield would drain deposits from community lenders, threatening financial stability. The crypto sector counters that yield access expands user choice and innovation. Senator Cynthia Lummis publicly stated that bipartisan compromise remains necessary for the bill to pass, adding that efforts continue to protect stablecoin rewards while addressing deposit flight concerns for small banks. Patrick Witt, executive director of the President's Council of Advisors for Digital Assets, weighed in on market sentiment. Senators continue reviewing the revised text, with the core question—whether stablecoin rewards qualify as bank-equivalent yield—still unresolved.