The U.S. Senate has released a compromise text resolving the last major dispute in the CLARITY Act. The law could permanently embed digital assets in U.S. finance and reshape competition between crypto firms and banks.
The CLARITY Act is the U.S. crypto industry's most important legislative project in Washington. The bill is designed to establish a comprehensive framework for trading in digital assets, define jurisdiction between the financial regulators SEC and CFTC, and give institutional players a legal basis to build products on infrastructure based on blockchains. The bill has been repeatedly delayed by one specific dispute: how much yield crypto firms should be allowed to offer customers holding stablecoins. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) released the compromise text on Friday after months of negotiations. The yield fight was the last major obstacle before committee markup.
The most consequential aspect of the CLARITY Act is not the yield section, but what the bill does to the baseline for the entire industry. Digital assets move from being a regulatory gray-area product to becoming an integrated part of the infrastructure of U.S. finance. Exchanges, custodians, fintech firms, banks and asset managers gain a legal basis to build and distribute products, and can for the first time underwrite regulatory risk in the same way they do for traditional financial products.
For institutional players, this has been the decisive missing piece. Without clarity on which regulator has jurisdiction, how tokens are classified, and what is permissible to offer, large parts of traditional finance have stayed on the sidelines. With the CLARITY Act, the breadth of investable assets expands, and the barrier to launching crypto-related products lowers. The number of crypto-related IPOs and acquisitions is expected to rise in the wake of the law.
Banks fought throughout the process to prevent stablecoin rewards from becoming competitors to interest-bearing deposits. On that point, they prevailed. The bill text explicitly justifies the ban on the grounds that institutions taking deposits provide financial services central to the strength of the U.S. economy, and that stablecoin issuers offering similar services may weaken these institutions.
But the bill reshapes the broader competitive landscape. The CLARITY Act gives crypto firms permanent legal grounding to build in areas extending well beyond yield — tokenization of traditional financial products, ledger services on blockchains and agentic trading gain a regulatory framing that makes it possible to build at industrial scale. Banks gain access to the same framework, and several major U.S. banks have already moved into tokenization and digital assets. Who benefits most from the new situation remains an open question.
The new text, codified as Section 404 of the bill, prohibits so-called covered parties — defined as digital asset service providers and their affiliates — from paying interest or yield to U.S. customers solely for holding stablecoins. The prohibition also covers payments that are economically or functionally equivalent to interest on an interest-bearing bank deposit.
Permitted stablecoin issuers and registered foreign issuers are exempt from the section, as they are already prohibited from paying direct interest under the GENIUS Act. Activity- and transaction-based rewards tied to genuine actions — so-called bona fide activities — are allowed, and are described as akin to the rewards programs financial firms offer on card usage. Loyalty programs and similar structures fall under the prohibition. The Treasury Department and the financial regulator CFTC are given one year from enactment to draft detailed rules.
The CLARITY text is designed to close a regulatory gap from the GENIUS Act, passed last year. The GENIUS Act prohibited stablecoin issuers themselves from paying interest directly, but did not fully address how exchanges and affiliated platforms could offer rewards that effectively functioned as yield in the secondary market.
It is precisely this breadth that has prompted reservations. The Crypto Council for Innovation supports the deal, but its CEO Ji Hun Kim writes on X that the new language goes "VERY FAR beyond" the GENIUS Act by covering all participants in the digital asset market, not only issuers. Kim also rejects the argument that stablecoin growth will drain banks of deposits.
Coinbase was the company with the most at stake in the negotiations. The exchange reported 1.35 billion dollars in stablecoin revenue in 2025, with a substantial portion of the business tied to USDC rewards. CEO Brian Armstrong summed up the response in three words on X: "Mark it up."
Coinbase Chief Policy Officer Faryar Shirzad writes on X that banks won tighter limits but that the right to reward genuine use of crypto platforms was preserved. The company's chief legal officer Paul Grewal says the text protects activity-based rewards tied to actual participation on the platforms, adding that much of the public debate has overstated the actual risks.
Shirzad also points out that progress in the compromise extends beyond the yield question. He highlights movement in negotiations on token classification, a safe harbor for decentralized finance and the framework for tokenization — all parts of the bill that have remained open while the yield debate has dominated.
The Blockchain Association, the Crypto Council for Innovation and the Digital Chamber all back the compromise, though with some caveats. Blockchain Association CEO Summer Mersinger calls the agreement a step in the right direction and warns that every day without a clear legal framework is an invitation for talent, capital and companies to leave the United States.
Circle's chief strategy officer Dante Disparte endorses the deal without reservation, pointing to USDC's growth in cross-border payments, capital markets collateral and agentic trading. Digital Chamber CEO Cody Carbone describes the release as an important step toward resolving one of the last outstanding issues before committee markup.
Not everyone is equally enthusiastic. Helius Labs CEO Mert Mumtaz expressed frustration with the framework, noting with a sharp undertone that Americans now cannot earn risk-free yield on dollars without going through a bank.
The deal forces a restructuring of the industry's rewards programs. Models built around passive holdings — buy and hold — will have to be replaced with structures that reward active use of the platforms. In practice, this means incentives shift from returns on reserves to returns on activity.
For Senator Tillis, it has been a stated aim to give the banking lobby time to be heard before the compromise was released. Tillis has signaled that he will urge the committee chair to move forward with markup, and that other unresolved points can be addressed in the further process. President Donald Trump said over the weekend that he would not let banks ruin the CLARITY Act.
The Banking Committee is expected to schedule a markup hearing — the formal step where committee members go through the bill text and can propose amendments — as early as the week of May 11, according to Alex Thorn, head of research at Galaxy Digital. Senator Bernie Moreno has said he expects the bill to be finalized by the end of May, while Senator Cynthia Lummis in April described the window as "now or never". Traders on Polymarket price the probability of the CLARITY Act being signed in 2026 at 55 percent — up nine percentage points within 24 hours of the text release.
Thorn warns at the same time that the release of the text does not necessarily mark the end of the fight. He expects banks to step up their opposition once markup is on the calendar. Several open questions remain — including the division of jurisdiction between the financial regulators SEC and CFTC, protections for staking, rules for capital formation, a possible safe harbor for decentralized finance, and a Democratic demand for a ban on senior officials profiting personally from the crypto industry, a provision aimed directly at Trump.
The markup hearing in the Banking Committee is the first formal step. After that comes coordination with the Senate Agriculture Committee, which has its own version of the framework, before the bill can move to the full Senate, where 60 votes are required to overcome a filibuster. According to lobbyists and Senate staff, a final vote must take place by July for the bill to remain alive this year.
For U.S. crypto policy, Friday's text marks the closest lawmakers have come to a comprehensive market structure law for digital assets in more than a decade. The yield debate has been visible because it was the obstacle — not because it was the bill's most important content.
Sources: CoinDesk, The Block, Forbes, Cointelegraph, Punchbowl News, Yahoo Finance
