Tillis and Alsobrooks Strike Stablecoin Yield Deal, Reviving CLARITY Act Push

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Senators Thom Tillis and Angela Alsobrooks released final compromise language on May 2 that resolves the stablecoin yield dispute blocking the CLARITY Act for months, potentially clearing the way for a Senate Banking Committee markup that stalled in January. Coinbase CEO Brian Armstrong’s response on X was three words: “Mark it up.”

Compromise Language Draws a Line Between Yield and Activity-Based Rewards

The deal appears as Section 404 of the bill and prohibits covered parties from paying interest or yield to U.S. customers solely for holding stablecoins or in any form functionally equivalent to interest on a bank deposit. Covered parties are defined as digital asset service providers and their affiliates. Permitted stablecoin issuers and registered foreign issuers are excluded from the prohibition, as both are already barred from paying direct interest under the GENIUS Act.

The ban does not reach activity-based rewards tied to genuine platform usage. Examples cited in legislative materials include payments, transfers, market-making, staking, governance, and loyalty programs, though the bill does not enumerate a full list. Rewards may also be calculated by reference to a user’s balance, duration, or tenure, provided they are tied to a qualifying activity. The SEC, CFTC, and Treasury Secretary are directed to jointly issue rules within one year.

Legislative Stall Followed Coinbase Withdrawal and Circle Stock Drop 

The Senate Banking Committee canceled a planned January 2026 markup after Coinbase withdrew support over an earlier version of the yield language. According to Yahoo Finance data, Circle’s stock fell roughly 20% in a single session following a draft circulated in late March 2026. The May 2 agreement resolves the yield dispute that had stalled talks involving the White House, the banking lobby, and the broader crypto sector since the start of the year. 

Coinbase reported $1.35 billion in stablecoin-related revenue in 2025. A substantial portion of it is tied to rewards-driven distribution payments from its USDC partnership with Circle, giving the company a direct commercial stake in how yield rules are drawn. The company is scheduled to report first-quarter 2026 earnings on May 7.

Bill Adds Consumer Protections and Mandates Interagency Deposit Study

The new text also bars covered parties from representing that stablecoins are investment products, carry U.S. government backing, or are FDIC-insured. The Treasury Department can assess civil monetary penalties of up to $5 million per violation, and the SEC, CFTC, and Treasury must jointly issue disclosure rules within one year of enactment.

Within two years, the Federal Reserve, OCC, FDIC, National Credit Union Administration, and Treasury must submit a joint report to Congress covering dollar-denominated stablecoin adoption, the effect on Treasury yields, and the impact of any customer compensation on bank deposit volumes and concentration. The provision gives Congress and regulators a data baseline to revisit compensation rules if deposit outflows occur.  

Long Legislative Road Remains Before Bill Reaches President Trump’s Desk

Senate Banking Committee Chair Tim Scott has not announced a markup date. If the bill clears committee, it faces reconciliation with a competing Senate Agriculture Committee version that passed along party lines in January 2026. 

The Senate bill would then need to be reconciled with the House’s Digital Asset Market Clarity Act, which passed 294-134 in July 2025, before any final version could be sent to President Trump.