On May 1, Senators Angela Alsobrooks and Thom Tillis finalized compromise language addressing stablecoin yield and rewards in the Senate’s ongoing CLARITY Act negotiations. The compromise is intended to resolve one of the key issues slowing the Senate’s negotiations, namely how to preserve the prohibition on stablecoin yield that resembles bank deposit interest while still allowing some rewards tied to stablecoin use.
The language would impose a broad prohibition on rewards offered “in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.” The proposal would reportedly direct regulators to develop a new stablecoin disclosure regime and identify permissible reward activities. The framework appears to preserve the core restriction on passive stablecoin yield while leaving room for some activity-based rewards or incentives tied to stablecoin use.
The banking industry has not endorsed the compromise as drafted. In a joint statement, several banking trade groups said the proposal advances the correct policy goal of prohibiting yield and interest on stablecoins, but “falls short” because it may still permit rewards structures they view as economically similar to yield. The groups specifically pointed to potential loopholes for exchange membership programs and rewards calculated by reference to duration, balance, or tenure, arguing that those features could incentivize idle stablecoin holdings and undermine the proposal’s deposit-flight objective.
Putting It Into Practice: The proposal continues the broader stablecoin yield debate (previously discussed here). The compromise language suggests lawmakers are increasingly focused on whether rewards function like deposit interest rather than simply whether value is transferred to users. As negotiations continue, companies offering stablecoin rewards programs should pay close attention to how concepts like “active use,” loyalty incentives, and membership-based rewards are ultimately treated in the final framework.
