CLARITY Act Update: Stablecoin Draft Release Faces Delay

Key Insights:

• The release of the stablecoin draft in the CLARITY Act has been delayed as lawmakers seek more clarity.
• Yield rules remain the biggest hurdle to progress on the crypto bill.
• Coinbase expects a possible Senate vote by May if talks succeed.

The much-awaited CLARITY Act approval is taking longer than expected, as lawmakers delay the release of revised rules around stablecoin yields. As lawmakers continue to work through key disagreements over the stablecoin proposal, the crypto bill’s progress remains uncertain.

Stablecoin Yield Dispute Delays CLARITY Act Progress

The stablecoin draft linked to the CLARITY Act was expected to go public this week. But the latest report says the draft is unlikely to be released this week, as it has been delayed again. Reports state that it could be expected next week or later.

Sources familiar with the matter claim that the stablecoin draft is not yet ready for public release. Lawmakers are continuing discussions with banking groups and crypto companies. This indicates that the talks are still ongoing.

According to the report, Senator Thom Tillis stated that he needs more clarity on when the Senate Banking Committee will review the crypto bill before making the text public.

The current draft largely sticks to earlier proposals. It would block users from earning rewards on idle stablecoin balances held in accounts. But it will still allow yield tied to activities like transactions. The source added that making major changes at this stage would be difficult.

Tillis has been working with Senator Angela Alsobrooks to finalize this part of the CLARITY Act. The draft aims to settle the long-running debate over whether crypto firms should be allowed to offer interest on stablecoin holdings.

Earlier, Tillis had said the draft could be released this week to help move the bill forward. However, the delay suggests that disagreements are still slowing progress, pushing the timeline beyond the initial deadline.

Debate Over Stablecoin Yield Continues

Notably, the debate over stablecoin rewards has become the biggest issue in the CLARITY Act. At the center of the issue is whether users should be allowed to earn returns on their stablecoin holdings.

The GENIUS Act, passed last year, already blocks stablecoin issuers from paying interest directly to users. However, it still allows third-party platforms, such as crypto exchanges, to offer rewards, creating a loophole. The CLARITY Act is now trying to close that gap and bring clearer rules.

Traditional US banks are strongly opposed to offering such rewards. They argue that if stablecoins start offering returns, customers may move their money out of bank deposits, which could affect liquidity and overall financial stability.

On the other hand, crypto companies like Coinbase disagree. They say banning rewards would slow down innovation and limit how stablecoins can be used. They also argue that banks themselves could enter this space instead of resisting it.

To find a middle ground, the White House has been holding private meetings with both sides since the beginning of the year. Despite these efforts, no agreement has been reached so far. With both banks and crypto firms holding firm to their views, lawmakers are still struggling to decide how strict the final rules on stablecoin rewards should be.

CLARITY Act Could Reach Senate Floor by May: Coinbase

Amid ongoing disputes, Coinbase Chief Policy Officer Faryar Shirzad stated that the CLARITY Act could move forward soon if current discussions stay on track. Ripple CEO Brad Garlinghouse also noted that the CLARITY Act is entering a critical phase.

The Coinbase CPO noted that the bill may be taken up by the Senate Banking Committee as early as this month. If that happens, a full Senate vote could follow in May. Shirzad sounded confident about the progress. He noted that there is strong momentum behind the bill and that lawmakers are working toward a bipartisan agreement.

His words read, “Hopefully Chairman Scott will schedule a markup as early as this month. We should be able to get to the floor in May and give the President and Congress another big bipartisan win.”