The Senate Banking Committee unveiled a 309-page revised draft of the Clarity Act days before a scheduled markup vote, reopening negotiations over stablecoin oversight, DeFi protections, and ethics rules tied to federal officials' crypto activities. Chairman Tim Scott said the legislation would provide "certainty, safeguards, and accountability" while strengthening the country's position in digital finance.
Stablecoin Reward Rules See Major Overhaul
The updated proposal explicitly bans passive yield simply for holding stablecoins, but permits activity-linked incentives connected to payments and platform participation — a compromise pushed by several crypto firms during negotiations. Coinbase had previously withdrawn support over reward restrictions, stalling the January markup. Reserve requirements are tightened as well: regulated stablecoins must maintain 1:1 backing using cash or short-term U.S. Treasuries, effectively excluding algorithmic stablecoins from the regulated market. State chartered trust companies can issue stablecoins until reaching a $10 billion threshold, after which they must transition to federal supervision.
DeFi Developer Protections Preserved
The draft incorporates language from the Blockchain Regulatory Certainty Act, clarifying that developers and infrastructure providers that do not custody user assets should not be treated as money transmitters under federal law. Law enforcement concerns about anti-money laundering obstacles were addressed after Senators Grassley and Lummis reached an agreement to preserve prosecutors' ability to pursue crypto-related financial crimes. The DeFi Education Fund said the legislation still contains critical protections for software developers, including BRCA language and Exchange Act safeguards.
Ethics Rules Remain the Biggest Sticking Point
One of the largest unresolved issues is the absence of conflict-of-interest rules covering federal officials and crypto investments. Democratic lawmakers insist ethics safeguards are necessary for bipartisan support. Senator Kirsten Gillibrand stated at Consensus Miami 2026 that Democrats would not back the bill without such provisions. Ranking member Elizabeth Warren criticized the omission after the draft was released. Bloomberg previously estimated that Donald Trump and affiliated ventures generated at least $1.4 billion through crypto-related activities, including memecoins and World Liberty Financial. White House crypto adviser Patrick Witt said the administration supports consistent ethics standards across government rather than targeting a single officeholder.
Banking Lobby vs. Market Research
American Bankers Association CEO Rob Nichols warned in a letter to bank executives that the current draft could encourage deposit migration from traditional banks into stablecoins. However, Galaxy Digital research argues that incoming foreign capital tied to stablecoin adoption could offset domestic deposit movement, as most future stablecoin issuance is expected to originate outside the U.S. Coinbase CEO Brian Armstrong said the talks didn't deliver every requested change but preserved the industry's "must haves," and revealed Coinbase is working with several of the world's largest banks on crypto integration.
Even if Thursday's markup succeeds, Senate negotiators must still merge the Banking Committee draft with a separate version approved by the Agriculture Committee. Final passage requires at least 60 votes, putting pressure on negotiators to secure Democratic support while disputes over ethics rules and stablecoin oversight continue.