Senate Clarity Act targets passive stablecoin yields

TLDR

A new Senate draft of the CLARITY Act would sharply restrict passive yield on stablecoin balances while allowing only tightly defined, activity-based rewards.

1. The draft would ban interest-like rewards for simply holding stablecoins and target economically equivalent structures offered by exchanges and brokers.
2. Stablecoin issuers, exchanges, and users could see lower or redesigned yields, as banks push to stop stablecoins from competing with insured deposits.
3. The bill is still in negotiation, with a late-April Senate hearing expected and key details to be defined later by the SEC, CFTC, and Treasury.

Deep Dive

1. How The Draft Targets Passive Yield

Recent CLARITY Act language reviewed on Capitol Hill would prohibit digital asset service providers, including exchanges, brokers, and affiliates, from paying yield on idle stablecoin balances or via structures that are economically equivalent to interest-like deposits. Reports note that loyalty, promotional, or subscription-style rewards tied to user actions (for example, payments or specific promotions) would remain allowed if they do not function like balance-based interest in the proposal text.

The bill would also instruct the SEC, CFTC, and Treasury to jointly define exactly what reward models are acceptable and to set anti-evasion rules within roughly one year of enactment, so the practical perimeter will ultimately depend on that rulemaking. A core goal is to prevent stablecoins from acting as unregulated savings accounts while still permitting some forms of usage incentives.

2. Impact On Users, Exchanges, And Issuers

For exchanges, the change is material. Analysts estimate that eliminating passive stablecoin yield could remove hundreds of millions of dollars in revenue from large platforms like Coinbase that share USDC-related income according to industry reporting. A separate analysis notes Circles stock dropped sharply after draft text banning passive yield emerged, reflecting concern about the long-term economics of USDC-style products if they cannot evolve into yield-bearing stores of value as highlighted in this review.

Banks have pushed for this outcome, arguing that yield-bearing stablecoins could divert deposits from the insured banking system and compress lending capacity. Users, in turn, may see lower headline yields on centralized U.S. platforms and a shift toward more complex, activity-based or on-chain strategies instead of straightforward passive rewards.

3. Legislative Status And What To Watch

The CLARITY Act already passed the House in 2025, but has stalled in the Senate largely over the stablecoin yield issue per recent coverage. A compromise led by Senators Thom Tillis and Angela Alsobrooks would bar rewards on passive stablecoin balances while allowing some activity-based incentives, and a Senate Banking Committee hearing is expected in the latter half of April.

Prediction markets and analysts see a meaningful, but not certain, chance the bill becomes law in 2026, with the stablecoin section viewed as one of the main swing variables. Even if it passes, the real shape of allowed stablecoin rewards will depend on how strictly regulators interpret the economic equivalence standard when they write implementing rules.

Conclusion

The CLARITY Acts focus on banning passive stablecoin yields is a direct response to banking-sector fears that yield-bearing stablecoins could compete with deposits, and it pushes rewards toward more tightly defined, activity-based models. If this framework becomes law and regulators apply a strict economic equivalence test, stablecoin users in the United States should expect simpler APY-style products on centralized platforms to shrink or disappear, even as the broader bill could provide long-awaited regulatory certainty for digital assets.