The long-running battle over stablecoin yield regulation in the United States may be approaching a resolution. Senator Tom Tillis (R-N.C.) said Monday that he plans to release a revised draft of the Digital Asset Market Clarity Act (CLARITY) later this week, according to a report from Politico Pro. The bipartisan bill, co-authored with Senator Angela Alsobrooks (D-Md.), aims to establish a comprehensive federal framework for the cryptocurrency industry.
The Core Dispute: Who Can Pay Yield on Stablecoins?
Stablecoins — digital assets pegged to the U.S. dollar such as Tether (USDT) and USD Coin (USDC) — now represent a market worth approximately $321 billion. The key question dividing banks and crypto firms is whether external platforms, including exchanges and wallet providers like Coinbase, should be allowed to offer rewards or interest on users' idle stablecoin balances. The GENIUS Act, passed in 2025, already prohibits stablecoin issuers from paying yields directly, but it left the door open for third-party intermediaries.
Banking groups have vigorously opposed any form of stablecoin yield, arguing that it would drain deposits from traditional savings accounts and cause what they call a structural disruption to the financial system. Crypto companies counter that restricting rewards stifles competition and limits platform growth. Coinbase, one of the most vocal critics of earlier drafts, withdrew its support for CLARITY last year over what it deemed overly restrictive yield provisions.
The Compromise: No Passive Interest, but Activity-Based Rewards Allowed
After months of deadlock, Tillis and Alsobrooks — with involvement from the White House — reached a preliminary agreement in March 2026. A draft shared with industry representatives in early April reveals the following key provisions:
- Passive yield is banned: Platforms cannot pay interest simply for holding a stablecoin balance. This addresses banks' concerns about deposit competition.
- Activity-based rewards are permitted: Incentives tied to specific user actions — such as executing a trade, making a payment, or engaging with a platform's features — are allowed. This gives crypto firms some room to incentivize usage without replicating traditional banking products.
- Joint rulemaking required: The SEC, CFTC, and Treasury Department must jointly define permissible reward structures and issue anti-circumvention rules within 12 months of the law's enactment. The precise definitions of “qualifying activities” are still under negotiation.
Tillis told Politico: “I think the language is well done. If things hold as they are now, we will likely release the text publicly later this week.” He added that he remains open to further modifications.
Remaining Hurdles and Market Odds
Neither side has fully embraced the latest draft. Crypto groups, including Coinbase, have expressed concerns about balance caps and transaction volume limits that appeared in earlier versions. Banking groups are now privately objecting to the latest proposal, though no specific complaints have been made public.
Beyond yield, several other issues remain unresolved: provisions related to decentralized finance (DeFi), ethics rules that would prevent government officials from personally benefiting from crypto, and potential additions linked to community bank deregulation.
Senate Banking Committee Chairman Tim Scott (R-S.C.) targets a markup session in late April, though no official date has been set. If the bill does not reach the Senate floor by May, it risks being postponed until after the 2026 midterm elections. Prediction markets on Polymarket currently give CLARITY a 59% chance of being signed into law this year, down sharply from over 82% earlier in 2026.
Industry Context: Y Combinator Makes First All-Stablecoin Investment
In a related development, startup accelerator Y Combinator this week completed its first investment denominated entirely in USDC, backing Totalis, a prediction market startup. The move underscores the growing utility of stablecoins in real-world financial transactions, even as regulatory clarity remains elusive.
What's at Stake
Resolving the stablecoin yield dispute would remove the single biggest obstacle to passing the first major U.S. crypto market structure law — an outcome that both industry leaders and the White House have championed for more than a year. If the CLARITY Act becomes law, it would provide a regulatory framework that could unlock further institutional adoption of digital assets, while also setting boundaries to protect traditional banking. Conversely, failure to advance could leave the U.S. crypto industry in regulatory limbo until after the 2026 elections, potentially ceding competitive ground to jurisdictions like the European Union and Singapore that have already enacted comprehensive regimes.
The coming days will be critical. The revised draft's reception by both banking and crypto stakeholders — and the Senate Banking Committee's willingness to move it forward — will determine whether the stablecoin yield stalemate finally yields to a compromise or drags on through another political season.