Crypto industry leaders review the first detailed look at new legislative language governing stablecoin yields and rewards in the Digital Asset Market Clarity Act or CLARITY Act. Some describe the proposed restrictions as overly restrictive, potentially limiting yields and rewards on stablecoin balances or transaction amounts.
Stablecoin Yields and Rewards Compromise in New CLARITY Act Language
Crypto industry representatives reviewed the latest legislative text in the CLARITY Act on March 23, outlining a compromise on stablecoin yield and rewards. Crypto trade groups also met with US Senate Banking Committee members, with bank representatives set to review the crypto bill text and meet today.
The text proposes to prohibit platforms from offering yield or interest on stablecoins. Notably, users will not receive any yield, either directly or indirectly, from depositing and holding stablecoins that resemble bank deposits.
The restriction would apply to digital asset service providers such as crypto exchanges, brokers, and other platforms. It will limit workarounds and bars anything “economically or functionally equivalent” to bank interest, Crypto In America’s Eleanor Terrett said.
On the other hand, the new CLARITY Act text permits activity-based stablecoin rewards from user activity. This includes loyalty, promotional, or subscription programs, but they must not be economically or functionally equivalent to deposit interest.
In addition, it also directs the US SEC, CFTC, and US Department of the Treasury to jointly define permissible rewards and establish anti-evasion rules within one year. Recently, the SEC and CFTC released crypto guidance, clarifying digital commodities and securities.
Crypto Industry Leaders See the Approach as Restrictive
Crypto industry leaders who reviewed the new CLARITY Act text called the overall approach “restrictive,” asserting it could reduce revenue streams for platforms that rely on yield to attract and retain users.
Non-yield-bearing stablecoins like USDC and USDT are expected to face minimal direct impact. However, top DeFi protocols and crypto exchanges offering passive returns will get impacted.
The CLARITY Act “draft is a departure from what had been previously discussed with the White House,” said a crypto insider. Also, the “economic equivalence” standard is vague and future regulators could interpret it as more restrictive.
Another representative claimed the new legislative language for stablecoin yields and rewards as “a more narrow and restrictive approach toward crypto.”
However, some claim the text reflects a balanced outcome, preserving transaction-based incentives while making clear stablecoins cannot function like interest-bearing deposit accounts.
“This is the best possible result,” some crypto insiders said, noting that the text is broader than the initial Thom Tillis-Angela Alsobrooks proposal. The crypto industry urges passage of the CLARITY Act, which remains stalled in the Senate, with a markup expected in mid-April.