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U.S. Senate negotiators have reached a compromise on stablecoin rewards in the Digital Asset Market Structure CLARITY Act. The agreement addresses one of the main issues that delayed the bill earlier this year.
The new language blocks crypto firms from offering passive stablecoin yield that resembles bank deposit interest. However, it allows rewards tied to real platform use, including payments, transfers, and network activity.
The compromise was shaped by Senators Thom Tillis and Angela Alsobrooks after months of talks between lawmakers, banks, crypto firms, the White House, and Treasury officials. The agreement addresses how crypto companies may offer rewards linked to payment stablecoins.
Under the proposed language, covered parties cannot pay interest or yield only because a user holds stablecoins. It also bans rewards that are “economically or functionally equivalent” to interest on a bank deposit.
Banks had pushed for this limit because they feared stablecoin reward products could draw deposits away from traditional lenders. They argued that bank-like returns from crypto firms could make it harder for lenders to fund loans.
However, the agreement does not ban all reward programs. It allows incentives based on bona fide activity, as long as they do not replicate deposit-style yield.
Coinbase said the compromise protects rewards linked to real crypto platform activity. The company had been active in the talks, as a broad ban could have limited customer reward programs across major exchanges.
Coinbase Chief Policy Officer Faryar Shirzad said banks gained more restrictions, but the industry protected “the ability for Americans to earn rewards, based on real usage of crypto platforms and networks.”
Coinbase CEO Brian Armstrong also responded to the proposed legislation on X by saying, “Mark it up.” His comment came as the agreement raised expectations that the Senate Banking Committee could move the bill forward.
Coinbase Chief Legal Officer Paul Grewal said the wording preserves activity-based rewards tied to real participation on crypto platforms and networks. He added that the language should not remain a basis for objection.
Still, crypto firms may need to adjust reward models. A person at a crypto company said firms may move from “buy and hold” rewards toward “buy and use” programs to fit the new limits.
The proposed legislation directs regulators to develop more detailed stablecoin reward rules after the bill becomes law. The Treasury Department and the Commodity Futures Trading Commission would lead the rulemaking process.
Regulators would also create a stablecoin disclosure system and define permissible reward activities. These rules could decide how crypto firms structure incentives for users in future products.
The proposal allows regulators to consider several factors when reviewing reward programs. These may include user balance, duration, tenure, activity type, and whether an incentive program is involved.
It also includes anti-evasion language. This part aims to stop companies from using affiliates or indirect arrangements to offer banned yield products.
Corey Frayer, director of investor protection at the Consumer Federation of America, said the wording could give regulators room to define what crypto companies may do with reward products.
The stablecoin deal removes a key obstacle for the CLARITY Act. However, the broader bill still faces talks over DeFi provisions, tokenization, software developer safeguards, and ethics rules for officials.
The legislation aims to create clearer rules for digital assets in the United States. Crypto executives have long said unclear regulation has slowed business growth and pushed activity outside the country.
The agreement follows the GENIUS Act, which created a federal framework for payment stablecoin issuers. That law covered reserve standards, redemption obligations, and anti-money laundering duties, but banks said it left gaps around rewards from exchanges or affiliates.
The next step depends on committee support in May. If the bill advances, lawmakers still need to align the Senate version with the House bill before any final vote.
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