Senators near stablecoin yield draft as banks push back

Senators negotiating a compromise on stablecoin yield may publish draft language this week that would decide whether crypto exchanges can offer rewards on stablecoin balances. Banking groups have pushed back on a White House Council of Economic Advisers analysis that found banning such rewards would have a minimal effect on community bank lending.

Sen. Thom Tillis (R-N.C.) and Sen. Angela Alsobrooks (D-Md.) are drafting language for the Clarity Act, a market-structure bill that has been stalled over the question of exchange-paid stablecoin yield. Tillis says negotiators have made progress on anti-evasion measures but are still finalizing enforcement provisions and expects to release the text later this week.

The Council of Economic Advisers modeled the impact of a ban and concluded that stopping exchanges from offering stablecoin rewards would increase community bank lending by about 0.02%. The American Bankers Association responded that the model used the current stablecoin market, roughly $300 billion, as its baseline rather than a scenario where yield-producing stablecoins expand to $1 trillion to $2 trillion, and argued the analysis “studied the wrong question.”

Lawmakers face a tight timetable. Several senators have warned the Clarity Act needs to clear Congress by May to avoid stalling ahead of the midterm elections. Treasury Secretary Scott Bessent urged lawmakers to finish the bill quickly and criticized crypto firms that oppose compromise as “nihilists.” Negotiators have said some stakeholder concerns reflect not having seen the full draft text.

If the draft limits or bans exchange-paid stablecoin yield, it could change how platforms offer rewards. Some crypto platforms currently offer interest-like payouts on stablecoins; one arrangement pays roughly 4% annually on USDC through a partnership between an exchange and the issuer Circle. Industry figures say restrictive rules could push U.S. users and liquidity to foreign platforms or to alternative structures that allow yield.

Industry and policy figures have reacted to the White House analysis and the draft negotiations in different ways. Summer Mersinger, chief executive of the Blockchain Association, said market-structure legislation still has bipartisan momentum because lawmakers want clear rules for digital assets. Simon Jones, chief executive of the layer-2 chain Reya, noted that the White House estimate makes it harder to argue that stablecoin yield is a systemic threat to banks: “When the White House’s own economists run the numbers and conclude that allowing stablecoin yield would increase bank lending by just 0.02%, it is difficult to maintain the claim of a serious banking threat.” Stefan Muehlbauer of CertiK warned that a flat prohibition on yield could lead exchanges to reject a deal.

Pierre Person, chief executive of Fira, framed the policy issue as one of location and supervision: “The real policy question is not whether stablecoin holders will receive yield, but where, and under whose supervision.” Negotiators are working to publish workable enforcement language quickly to keep the Clarity Act on track before the legislative window for this Congress narrows.