CLARITY Act Ties Stablecoin Rewards to Economic Activity

As the United States advances the Digital Asset Market Clarity Act, or CLARITY Act, to regulate stablecoins, the boundary between traditional finance and cryptocurrency is being redrawn. Banks fear that if the bill allows issuers to offer interest or yield indirectly, payment stablecoins would effectively become substitutes for deposits. That would threaten traditional banks' funding sources and could weaken the banking system's lending capacity, prompting strong resistance and calls for amendments from the traditional financial sector.

On July 13, 2026, the American Bankers Association, the Independent Community Bankers of America and other groups sent a joint letter to Senate leaders seeking revisions to ambiguous stablecoin yield language in Section 404 of the bill. The ICBA warned that failure to close the loophole could drain as much as $1.3 trillion in bank deposits and reduce lending capacity by $850 billion. The bill passed a Senate committee in May, with a hearing scheduled for July 17.

The CLARITY Act aims to establish regulatory responsibilities for the U.S. digital asset market. The dispute centers on whether Section 404 can prevent stablecoins from effectively paying interest through rewards. Banks fear funds could move from FDIC-insured deposits into stablecoins, weakening lending for mortgages, small and medium-sized businesses, and agriculture. The Treasury Department estimates that as much as $6.6 trillion in deposits could be at risk of outflows.

On July 13, the American Bankers Association, the Independent Community Bankers of America and 76 state banking associations urged bipartisan Senate leaders to tighten Section 404. The bill passed the Senate Banking Committee by a 15–9 vote on May 14, but no date has been set for a floor vote. That uncertainty could make it difficult to enact the legislation before the November 2026 midterm elections.

The U.S. CLARITY Act seeks to establish a market structure and division of regulatory responsibilities for digital assets. The crypto industry sees it as crucial legislation for clarifying rules governing securities, commodities and trading platforms. Its progress will affect not only compliance pathways for U.S. businesses but also competition between stablecoin rewards and bank deposits, as well as the future boundaries of DeFi regulation.

Galaxy Digital head of research Alex Thorn recently cut his estimate of the bill's chances of passing in 2026 to 60%. He warned that committee consideration must be completed by the end of April, with the measure reaching the Senate floor in May; if that window is missed, its chances of passing this year would be extremely low. Wintermute's Ron Hammond had previously put the probability at just 30%, highlighting a compressed legislative calendar and opposition from the banking industry as the main obstacles.

The CLARITY Act moving through the U.S. Congress seeks to establish a federal regulatory framework for digital asset markets. Whether stablecoins may pay yields to holders has implications for bank deposits, the payments market and crypto companies’ business models. JPMorgan said traditional banks fear deposit outflows, while the crypto industry wants to preserve yield-bearing structures, deepening the legislative dispute.

JPMorgan’s latest report said the probability of the CLARITY Act passing by December 31, 2026, has declined because of political resistance and the unresolved definition of “stablecoin yield.” The recent debate has centered on whether stablecoins should be allowed to pay interest, with the banking and crypto industries yet to reach a consensus. Available information on the event disclosed neither a specific market value nor a new voting date.

The CLARITY Act aims to divide oversight of crypto assets between the US Securities and Exchange Commission and the Commodity Futures Trading Commission while strengthening the GENIUS Act’s restrictions on interest payments by stablecoin issuers. A central issue is whether platforms such as Coinbase may distribute rewards. Coinbase generated more than $1.3 billion in stablecoin-related revenue in 2025, and the rules could reshape platform business models and competition for bank deposits.

The US Senate Banking Committee released a revised 309-page draft on May 12 incorporating a compromise reached by Thom Tillis and Angela Alsobrooks on May 1. It would prohibit interest or yield paid solely for holding stablecoins while preserving activity-based rewards tied to transactions, payments and platform use. The committee approved the bill by a 15–9 vote on May 14 and sent it to the full Senate for consideration.

The Clarity Act is a key U.S. congressional effort to provide greater regulatory certainty for crypto assets. It aims to establish a federal regulatory framework for payment stablecoins and clarify rules governing issuance, reserve assets and regulatory jurisdiction. Because stablecoins are widely used in trading and payments, the bill’s trajectory will affect compliance costs and market strategies across the industry.

The U.S. House of Representatives recently held a markup session on the Clarity Act, reviewing and debating the bill provision by provision. Despite disputes among lawmakers over some clauses, the measure advanced to the next stages of the legislative process. Existing reports did not disclose the exact date of the meeting, the vote tally or any amounts involved. The timing of a full House vote and Senate consideration remains to be seen.

The U.S. Digital Asset Market Clarity Act, or CLARITY Act, aims to delineate the regulatory authority of the SEC and CFTC and establish rules for blockchain networks, tokens and trading platforms. The House passed the bill by a vote of 294–134 in July 2025, seeking to reduce regulatory uncertainty and the risk of the industry moving offshore.

The Senate Banking Committee advanced a related bipartisan version on May 14, 2026. It must next be reconciled with the Agriculture Committee’s version before going to the full Senate for a vote. Andreessen Horowitz’s a16z crypto subsequently said clear rules could foster domestic innovation and preserve the dollar’s position. At the time, the U.S. Dollar Index stood at 99.27, up 1.28% over the previous 30 days.

The CLARITY Act seeks to define how oversight of crypto assets should be divided between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, making it a key piece of legislation for establishing federal market rules. The bill remains stalled over stablecoin yield provisions, with the crypto and banking industries still divided over interest, rewards and the impact on competition for deposits.

Republican Senator Thom Tillis urged the Senate Banking Committee to delay its review until May to allow more time for negotiations. The committee subsequently scheduled a markup for May 14, while Chairman Tim Scott had hoped to finish the process by May 21. However, the July 4 deadline passed without the bill clearing the hurdle, raising concerns that it may not pass before the November midterm elections.

US cryptocurrency regulation has long relied on securities and commodities laws as well as regulators’ discretion, leaving the boundaries around token classification and developer liability unclear. Nonprofit advocacy group Coin Center says the CLARITY Act is intended to establish a framework for classifying digital assets and provide statutory protections for noncustodial blockchain developers, determining whether the industry can operate under predictable rules.

As of July 20, 2026, the CLARITY Act and related blockchain legislation remained stalled in the US Senate, with provisions including stablecoin yield among the disputed issues. No specific amount is involved. Coin Center warned that unless Congress explicitly limits regulatory discretion, future administrations could change their enforcement stance and take tougher measures against cryptocurrency companies and developers.

Payment stablecoins are typically redeemable at a fixed value of $1, with issuers profiting from interest earned on reserves. Banks fear deposit outflows if those returns are passed on to holders. The GENIUS Act became law on July 18, 2025, establishing a framework for payment stablecoins. The CLARITY Act would divide oversight between the SEC and CFTC, making the yield dispute a key hurdle to advancing market-structure legislation in the Senate.

The Office of the Comptroller of the Currency unveiled a draft rule on March 2, 2026, that would prohibit permitted issuers from paying interest in cash or tokens solely for holding or using payment stablecoins. Indirect payments through affiliates would also be presumed to violate the rule. The proposal also covers state-regulated issuers overseen by the OCC with more than $10 billion in issuance, and comments are due by May 1. The same day, Senators Thom Tillis and Angela Alsobrooks finalized a compromise on yield provisions in the CLARITY Act.