Senators Propose Stablecoin Compromise; Banks Stay Silent

Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) on Friday released revised language for the Clarity Act that would bar rewards paid on stablecoin deposits while permitting rewards tied to staking, governance and validation activities. The proposal would direct regulators and the Treasury to define permissible reward categories after the bill’s passage. Major banks have not publicly endorsed the language and are expected to challenge carve-outs they view as replicating bank interest.

The Clarity Act aims to codify legal permission for most crypto activities in the United States and has been a top industry policy priority. The revised text prohibits payments on stablecoin deposits that are “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit,” while allowing incentives based on platform or network participation.

Under the proposal, firms could offer rewards tied to staking, validation or governance. Those rewards could be calculated with reference to a user’s account balance, a point that banking negotiators have raised in private talks.

Crypto industry officials welcomed the language. Coinbase chief policy officer Faryar Shirzad posted on X that the proposal “protected what matters-the ability for Americans to earn rewards, based on real usage of crypto platforms and networks.” Coinbase CEO Brian Armstrong urged the Senate Banking Committee to schedule a vote.

Banking groups have remained largely silent in public but have lobbied regulators and Treasury officials in recent days. Trade associations sought stricter limits on stablecoin yield as Treasury implements provisions of last year’s GENIUS Act. The American Bankers Association argued in submissions to Treasury that firms should be barred from passing yield-like benefits to stablecoin holders indirectly and asked for rules to prevent cosmetic structures that replicate interest.

The bill gives regulators a central role in listing permissible reward categories after enactment. That regulatory process will determine how broad the exceptions for staking and governance are and whether reward formulas that reference account balances are treated as equivalent to interest. A Washington insider predicted banks would object if the carve-outs allow rewards that mirror traditional interest accounts.

Senate Banking Committee Chair Tim Scott (R-S.C.) announced he plans to schedule a committee vote this month. The committee has two weeks of session time in May, and senators supporting digital asset legislation have warned that failure to advance the bill could delay comprehensive crypto rules before the midterm elections.

Banks have argued that high yields on stablecoins could draw deposits away from traditional savings accounts. Crypto firms maintain that rewards tied to network participation and usage are a feature of digital asset platforms and were not explicitly prohibited by the GENIUS Act.

For now, crypto executives and policy advocates have publicly welcomed the revised Clarity Act language, while major banks have stayed publicly quiet as negotiations continue.