Clarity Act heads to Senate floor as stablecoin fight cuts crypto yield options
Reducing the yield of Stablecoin brings CLARITY back to work.
Summary
- The CLARITY Act is headed to a crucial Senate Banking Committee meeting soon to be held in May, with a fragile consensus on stablecoin rewards paving the way for a vote.
- The draft document would effectively ban interest-like profits on stablecoin balances for all trades and consumers, forcing the CeFi and DeFi sectors to rethink reward products that compete with bank deposits.
- Prediction markets now place the likelihood of the bill becoming law by 2026 at around 55%, as the regulatory push comes together with similar efforts such as FIT21 and the SEC-CFTC joint token exchange.
The CLARITY Act, the burgeoning US digital asset market structure bill, is nearing its next procedural test in the Senate after negotiators removed compromise language from stablecoin awards that stalled progress for months. CryptoSlate reports that senators Thom Tillis and Angela Alsobrooks unveiled a revised text last week targeting yields on stablecoin balances, raising expectations that the Senate Banking Committee could finally take up the bill the week of May 11 following a delay in April. A policy note from Brownstein Hyatt Farber Schreck notes that HR 3633, the House version of the CLARITY Act, passed the House in July 2025 by a bipartisan vote of 294-134 and cleared the Senate Agriculture Committee in January 2026, but returned to the House with strong language.
The current draft goes a long way in that regard. According to Fintech Weekly, the latest version of the Digital Asset Clarity Act document being reviewed in closed session on Capitol Hill will prohibit giving a yield “directly or indirectly” on stablecoin balances and prohibit anything “economic or functionally equivalent to bank interest.” This provision applies not only to issuers but also to exchanges, brokers and affiliated organizations, closing structural solutions that had allowed platforms like Coinbase to continue offering stablecoin rewards to users even after the previous GENIUS Act had restricted the issuers themselves.
CryptoRank, quoting Senate staff and industry sources, says the latest consensus reduces but does not eliminate the crop: The Banking Committee staff has floating language that may allow rewards associated with promotional programs or non-interest incentives, but the goal is clear—no more passive interest, to put money on stablecoins that may compete directly with banking products. That’s exactly what the US’s biggest banks have left, as TheStreet reports that major institutions have warned lawmakers the CLARITY framework “may not fully protect deposits or limit risk” unless it suppresses token yields that look like dark banking.
What CLARITY means for BTC, ETH, stablecoins and DeFi
In the broader crypto market, the CLARITY Act is part of a broader regulatory framework. Galaxy Digital notes that CLARITY advances in line with the Financial Innovation and Technology for the 21st Century Act (FIT21), which the House passed in May 2024 by a vote of 279-136 to divide power between the SEC and the CFTC based on whether blockchain is “active” or “suspended.” That combination, along with a March 2026 SEC‑CFTC joint release that creates a five-tier token tax and expressly designates 16 assets as digital assets, lays the legal groundwork for assets like bitcoin and ether to remain firmly under CFTC oversight while the long tail of tokens remain securities.
Brownstein’s April 2026 update emphasizes that CLARITY is now less about “if” than “when,” even though there is little time to go in the US election cycle. KuCoin’s legislative tracker puts the status as “pending” but it’s shifting to the inevitable, with a tentative timeline for a Senate Banking markup in mid-March or mid-May, a full Senate vote in late spring and a possible presidential signature in June that could trigger a temporary registration period for digital asset intermediaries.
In the near term, the most direct market impact on stablecoin economics and yield products. The Payments Association’s analysis argues that as the law tightens, banks will be able to issue their stablecoins and integrate them into payment and treasury operations, while non-bank issuers shift to fee-based models rather than interest-like rewards. On a centralized exchange, a CLARITY-style ban on stablecoin production would force a pivot from “profitable” products that simply go through issuer rewards to more complex structures—staking, base trading, or token credit—that may fall outside the definition of a bill of return such as a deposit.
Prediction markets are already showing the stakes. CryptoRank notes that Polymarket traders now put the probability of CLARITY becoming law in 2026 at around 55%, up nine percent in one day after the stablecoin’s yield compromise document appeared. As FinTech Weekly’s report on token hearings put it, the US is in a rare “legislative window” where the SEC-CFTC tax, Nasdaq approval of certified securities trading, dedicated House token hearings, and the imminent CLARITY markups all converge in the same quarter. If that window closes without a final pass, US crypto markets will remain on what Galaxy calls “borrowed time”—operating under patchwork enforcement and temporary guidance instead of legal clarity that could eventually force bitcoin, ether, stablecoins and DeFi into a unified federal realm.
