The long-awaited stablecoin yield compromise for the CLARITY Act, a critical legislation under US cryptocurrency regulations, has been clarified. According to text obtained by Punchbowl News, Senators Thom Tillis and Angela Alsobrooks have reached a comprehensive agreement on stablecoin yields.
The agreement imposes significant limitations on the rewards and returns offered to stablecoins. Accordingly, all reward mechanisms deemed “economically or functionally equivalent” to bank deposit interest will be prohibited. This statement stands out as a broad restriction aimed at preventing stablecoins from directly competing with traditional banking products.
However, instead of imposing a completely strict ban, the text also includes a certain degree of flexibility. Stablecoin balances may be allowed to be used in reward mechanisms, but these rewards will need to pass an “equivalence test.” This allows crypto companies to offer user incentives under certain conditions, while aiming to prevent interest-based structures similar to those in the banking system.
Commenting on the process, Coinbase executive Faryar Shirzad stated that the final text is now publicly available, adding that discussions were largely based on “hypothetical risks.” The Coinbase executive said that after months of negotiations, an agreement was reached with White House, Treasury Department, and Senate officials.
Shirzad acknowledged that banks have gained more control over the process, but added that the crypto sector has preserved the ability for users to earn rewards based on actual usage. He also stated that maintaining the US’s leadership in financial innovation is critical, especially in the current geopolitical environment.
With this agreement on stablecoin yields now reached, attention has turned to other aspects of the bill. Significant progress has been reported in areas such as token classification, DeFi regulation, and tokenization, and the final text of the CLARITY Act is expected to be completed and passed through the legislative process soon.
*This is not investment advice.