Coinbase, Lawmakers Reach Stablecoin Yield Deal on Clarity Act

Coinbase announced on Friday that U.S. lawmakers reached a compromise on stablecoin yield provisions in the Clarity Act, potentially clearing the way for a long-stalled Senate Banking Committee markup. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) finalized the deal on Friday evening, according to Punchbowl News, ending a months-long dispute that had involved the White House, banking lobby, and the broader digital asset sector since the start of the year.

Stablecoin Yield Compromise Details

The compromise, codified as Section 404 of the bill, prohibits “covered parties” (digital asset service providers and their affiliates) from paying any form of interest or yield to U.S. customers solely for holding stablecoins, or in any manner “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.” The prohibition excludes permitted stablecoin issuers and registered foreign issuers, which are already barred from paying direct interest under the GENIUS Act.

Crucially, the compromise permits “activity-based or transaction-based rewards and incentives” tied to bona fide activities. The bill directs the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Treasury Secretary to jointly issue rules within one year defining a non-exhaustive list of permitted activities, expected to include payments, transfers, market-making, staking, governance, and loyalty programs.

In a significant concession to crypto firms, the bill provides that permitted activity-based rewards “may be calculated by reference to a balance, duration, tenure, or any combination of the foregoing.” This language gives platforms flexibility to design programs that factor in how much a user holds and for how long, so long as the underlying reward is tied to qualifying activity.

Commercial Stakes and Coinbase Response

Coinbase reported $1.35 billion in stablecoin revenue in 2025, much of it from rewards-driven distribution payments tied to its USDC partnership with Circle. Coinbase Chief Policy Officer Faryar Shirzad stated on X: “In the end, the banks were able to get more restrictions on rewards, but we protected what matters, the ability for Americans to earn rewards, based on real usage of crypto platforms and networks.” CEO Brian Armstrong’s response on X consisted of three words: “Mark it up.”

The deal closes a months-long stalemate that repeatedly knocked the broader market structure bill off track. The Senate Banking Committee canceled a planned January markup at the last minute after Coinbase pulled its support over an earlier version of the yield language. The exchange rejected another draft in late March that sent Circle’s stock down 20% in a single session.

Additional Regulatory Requirements

Beyond the yield prohibition, the new text imposes additional requirements. Covered parties cannot represent that stablecoins are investment products, are backed by the full faith and credit of the United States, or are FDIC-insured. The Commissions and Treasury must jointly promulgate disclosure rules within one year, and violations carry civil monetary penalties of up to $5 million per violation, assessed by the Treasury Department.

Within two years, the Federal Reserve, OCC, FDIC, NCUA, and Treasury must jointly submit a report to Congress analyzing the adoption of dollar-denominated stablecoins, the effect on Treasury yields, and the impact of any compensation paid to U.S. customers on the volume, stickiness, composition, and concentration of bank deposits.

Legislative Pathway Forward

Senate Banking Committee Chair Tim Scott (R-S.C.) has not yet announced a date for a markup. Senator Cynthia Lummis (R-Wyo.) told an audience in March that she expected a markup before the end of April, a timeline that has since slipped. Senator Bernie Moreno (R-Ohio) warned in March that if Congress fails to pass crypto market structure legislation by May, “digital asset legislation will not pass for the foreseeable future.”

If the bill clears the Banking Committee, it will need to be reconciled with a competing version from the Senate Agriculture Committee, which passed its own draft along party lines in January, before going to the full Senate floor. Any final Senate bill would then need to be reconciled with the House’s version, the Digital Asset Market Clarity Act, which passed 294-134 last July with bipartisan support, before reaching President Donald Trump’s desk.

Yield was not the only outstanding issue. Tillis has also pushed for ethics provisions aimed at preventing the President and other government officials from profiting from the crypto sector, and language around DeFi and illicit finance remains unresolved.

FAQ

What does the compromise prohibit? The compromise prohibits covered parties (digital asset service providers and their affiliates) from paying any form of interest or yield to U.S. customers solely for holding stablecoins. However, it permits activity-based and transaction-based rewards tied to bona fide activities such as payments, transfers, market-making, staking, governance, and loyalty programs.

Can platforms still offer rewards under the new rules? Yes. The compromise allows permitted activity-based rewards to be calculated by reference to balance, duration, tenure, or any combination thereof, provided the underlying reward is tied to qualifying activity. This gives platforms flexibility to design programs while maintaining the activity-based requirement.

What happens if the bill passes the Senate? If the bill clears the Senate Banking Committee, it must be reconciled with the Senate Agriculture Committee’s version, then with the House’s Digital Asset Market Clarity Act (which passed 294-134 last July), before reaching President Trump’s desk for signature or veto.