US Clarity Act draft curbs stablecoin rewards

TLDR

A fresh US Clarity Act draft would ban interest-like rewards on passive stablecoin balances and only permit narrowly defined activity-based incentives.

1. The bill would bar platforms from paying yield directly or indirectly on stablecoin balances or via anything economically equivalent to bank deposit interest.
2. Exchanges and issuers that monetise stablecoin deposits, including Circle and Coinbase, already saw sharp share price drops as this model is directly targeted.
3. The text is still draft, and upcoming Senate negotiations plus later SEC, CFTC, and Treasury rulemaking will determine how strict the final reward regime is.

Deep Dive

1. What The Draft Actually Bans

The latest Digital Asset Market Clarity Act draft would prohibit platforms from offering yield on stablecoin balances directly or indirectly and from using structures economically or functionally equivalent to interest on bank deposits, according to multiple reports. This applies to exchanges, brokers and other digital asset service providers, not just issuers, and aims to stop workarounds where platforms share interest earned on reserves to fund user yield programs. Earlier law, the GENIUS Act, already barred issuers from paying interest directly, and this draft is explicitly designed to close remaining pass-through and lookalike models for passive stablecoin yield.

At the same time, the draft permits activity-based rewards, such as loyalty, promotional or subscription benefits tied to usage rather than account balances, so long as they do not mimic deposit interest or scale with balances in an interest-like way. The SEC, CFTC and Treasury would have one year after enactment to jointly define which reward schemes qualify and to implement anti-evasion rules, leaving significant uncertainty for product design until that guidance is issued.

2. Impact On Platforms And Stablecoin Users

Circle and Coinbase, whose partnership relies heavily on revenue from USDC reserves and related user incentives, saw stocks fall around 18 to 20 percent and 8 percent respectively after the draft language surfaced, as the market priced in risk to that business line. Analysts note the bill targets the pass-through model where Circle earns interest on USDC reserves and shares it with Coinbase, which then funds user rewards on stablecoin balances, describing it as pulling the rug on that growth engine.

For users, this could mean US-facing platforms phase out passive earn or cash yield on parked stablecoins and pivot to spend or activity-based perks, such as card cashbacks or trading rebates. Non-yield-bearing dollar stablecoins like USDC and USDT can still be used for payments and trading, but their appeal as a simple yield-bearing store of value inside regulated US platforms would be curtailed.

3. Legislative Path And Key Unknowns

This language is part of a broader Clarity Act market-structure bill that already passed the House in 2025 and has been stuck in the Senate largely over stablecoin yield and ethics provisions. The new compromise between Senators Thom Tillis and Angela Alsobrooks and the White House is meant to unlock a Senate Banking Committee markup, but the bill still needs to clear committee, win 60 votes on the Senate floor, be reconciled with other versions and then be signed into law.

If it does pass, the most important next phase will be the one year of joint rulemaking where the SEC, CFTC and Treasury decide how narrowly to apply economic equivalence and which activity-based rewards remain allowed. That technical interpretation will decide whether US stablecoin incentives become nearly yield-free, or whether creative but compliant reward structures can preserve some economic upside for onshore users.

Conclusion

The current Clarity Act draft points toward a US regime where on-platform stablecoins function more like payment and settlement tools than interest-bearing savings products. For now it is only draft language, but both market reaction and the structure of the proposal suggest passive stablecoin yields on regulated US platforms face sustained pressure, with the real battle shifting to how activity-based rewards are defined in forthcoming rules.