The Chairman of the Senate Banking Committee, Tim Scott, has released the amended version of the CLARITY Act of the crypto bill’s markup this week. Notably, the bill prohibits crypto firms from distributing yields to customers, further expanding the scope of the yield prohibition in the GENIUS Act.
Senate Banking Committee Unveils Amended Version Of CLARITY Act
In a press release, Tim Scott unveiled the updated version of the crypto bill, noting that it reflects months of negotiations with Democratic colleagues, signaling that the bill now has bipartisan support. This development comes just ahead of the bill’s markup, which holds this Thursday.
CoinGape had reported over the weekend that the Senate had issued an official notice for the highly anticipated CLARITY Act markup. The notice stated that all member amendments are due no later than January 13, meaning that committee members have only today to make amendments to the crypto bill.
The debate over whether crypto firms can distribute stablecoin rewards to customers is again in focus following the release of the crypto bill. The amended version shows that the yield prohibition in the GENIUS Act, which focuses on stablecoin issuers, could also extend to crypto firms.
The Stablecoin Yield Prohibition
The updated CLARITY Act states that crypto service providers may not pay any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding of a payment stablecoin.
The crypto bill only permits the distribution of stablecoin rewards in connection with activities such as staking, liquidity provision, providing collateral, and governance purposes. This provision further expands the scope of the GENIUS Act, as, under that legislation, only stablecoin issuers were prohibited from distributing yield on stablecoins.
This development follows months of bank lobbying, in which banking stakeholders urged senators to restrict stablecoin rewards and extend the prohibition to crypto service providers such as Coinbase. Meanwhile, Coinbase and other crypto firms have also been pushing against provisions in the CLARITY.
CoinGape reported that Coinbase warned it may reconsider backing the CLARITY Act due to DeFi and stablecoin reward restrictions. The crypto exchange had warned that such a provision hinders innovation in the country.
Legal expert Jake Chervinsky also commented on the release of the amended version of the crypto bill, noting that a lot has changed since the draft that came out last September. “Amendments are due by 5 pm ET, so it’s a mad scramble today identifying critical issues to fix in markup. Sadly, there are many,” he added.