What Did Lawmakers Agree on in the Stablecoin Yield Compromise?
US lawmakers have reached a compromise on stablecoin yield provisions, removing a key obstacle that had delayed progress on the Digital Asset Market Clarity Act. Sens. Thom Tillis and Angela Alsobrooks finalized the language on Friday, with the agreement centered on how crypto firms can reward users holding stablecoins.
Section 404 of the bill prohibits digital asset service providers from offering any form of interest or yield to US customers that is “economically or functionally equivalent” to a bank deposit. The restriction targets programs that resemble traditional savings products, aligning stablecoins more closely with payment instruments rather than yield-bearing accounts.
The rule applies broadly to crypto platforms and their affiliates, while exempting certain regulated stablecoin issuers that are already restricted under existing legislative frameworks.
What Types of Rewards Are Still Allowed?
The compromise preserves “activity-based or transaction-based rewards” tied to legitimate platform usage. These include incentives linked to payments, transfers, trading activity, staking, governance participation, and loyalty programs.
Regulators including the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Treasury Department are tasked with defining permitted activities within one year. The framework allows rewards to be calculated based on user balances, holding duration, or tenure, provided they are tied to qualifying activity rather than passive holding.
“In the end, the banks were able to get more restrictions on rewards, but we protected what matters, the ability for Americans to earn rewards, based on real usage of crypto platforms and networks,” Coinbase Chief Policy Officer Faryar Shirzad said.
Investor Takeaway
Why Does This Matter for Coinbase and the Crypto Industry?
The yield provision has been a central issue for Coinbase, which generated $1.35 billion in stablecoin revenue in 2025, much of it tied to reward-based distribution linked to its USDC partnership with Circle. Earlier drafts of the bill had triggered market reactions, including a sharp decline in Circle’s valuation after stricter proposals emerged.
Coinbase CEO Brian Armstrong responded to the agreement by urging lawmakers to move forward, writing: “Mark it up.” The resolution of the yield dispute removes a major point of contention that had stalled committee action for months.
The agreement also introduces new compliance requirements. Platforms cannot market stablecoins as investment products or claim they are backed by the US government or insured by the FDIC. Violations could result in civil penalties of up to $5 million per breach.
Investor Takeaway
What Happens Next for the Clarity Act?
The agreement clears the way for a Senate Banking Committee markup, which had been delayed multiple times due to disagreements over the yield language. The bill will still need to be reconciled with a separate version passed by the Senate Agriculture Committee before moving to a full Senate vote.
Any final legislation must then align with the House-passed Digital Asset Market Clarity Act before reaching the president. Additional issues remain unresolved, including provisions related to decentralized finance, illicit finance controls, and ethics rules for government officials.
The timeline remains tight. Lawmakers have warned that failure to advance crypto market structure legislation in the near term could delay comprehensive regulation for an extended period, leaving the industry operating under fragmented oversight.