After months of political deadlock, bruising industry negotiations, and at least one dramatic market meltdown, the stablecoin rewards debate in the United States has finally found its footing — and the crypto industry is calling it a win.
Over the weekend, lawmakers achieved a breakthrough agreement on the market structure bill known as the CLARITY Act (Digital Asset Market Clarity Act of 2025) that maintains stablecoin incentive schemes intact under certain conditions. The deal has sent ripples across both Wall Street and crypto markets.
What the Compromise Actually Says
The distinction at the heart of this deal is simple but significant: passive yield is out, activity-based rewards are in.
Section 404 of the bill bars covered parties from paying any form of interest or yield to U.S. customers solely for holding stablecoins, or anything economically or functionally equivalent to interest on an interest-bearing bank deposit.
But here’s the key carve-out that the crypto industry fought hard to protect: the bill would still allow rewards tied to real activity on crypto platforms and networks. That means users can still earn rewards for trading, staking, validating, governance participation, payments, or loyalty activity — just not for simply parking their stablecoins.
That language gives platforms flexibility to design programs that factor in how much a user holds and for how long, so long as the underlying reward is tied to qualifying activity.
Why This Took So Long
The road to this compromise was anything but smooth. The Senate Banking Committee canceled a planned January markup at the last minute after Coinbase pulled its support over an earlier version of the yield language, and the exchange rejected another draft in late March that sent Circle’s stock down 20% in a single session.
Like every good compromise, there are elements of the wording that both sides will dislike. The win for the banking lobby is a repeated acknowledgment in multiple clauses that anything resembling a bank deposit is not allowed. Even the section title shifted — from ‘Preserving Rewards for Stablecoin Holders’ in January to ‘Prohibiting Interest and Yield on Payment Stablecoins’.
The negotiations were led by Senators Thom Tillis and Angela Alsobrooks, with the process facilitated by the White House and months of input from both bank lobbyists and crypto insiders.
Big Winners: Coinbase and Circle
Few companies had more riding on this outcome than Coinbase and Circle, the issuer of USDC.
Coinbase reported $1.35 billion in stablecoin revenue in 2025, much of it linked to rewards-driven distribution payments from its USDC partnership with Circle.
Coinbase Chief Policy Officer Faryar Shirzad said, “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 CEO Brian Armstrong’s response was three words: “Mark it up.”
Shares of Circle surged after the weekend compromise was announced, with the deal seen as a relative win for both Circle and Coinbase.
What It Means for Banks
Traditional banks largely supported stricter limits on stablecoin yield, fearing that competitive crypto products could drain deposits and destabilize lending. They got meaningful guardrails — but not a complete victory.
Bank of America analyst Ebrahim H. Poonawala said in a note, “Across bank sub-sectors, the CLARITY Act’s resolution of the stablecoin yield debate is a net positive. It should alleviate concerns tied to deposit flight, reduce regulatory uncertainty, and allow banks to engage with digital asset infrastructure on more controlled terms.”
Additionally, within two years, the Federal Reserve, OCC, FDIC, NCUA, and Treasury must jointly submit a report to Congress analyzing the adoption of dollar-denominated stablecoins and the impact of any compensation paid to U.S. customers on the volume, composition, and concentration of bank deposits, giving the banking lobby a built-in opening to revisit the issue if deposit flight materializes.
What Comes Next
The compromise is a major step, but the CLARITY Act is not law yet.
The House passed H.R. 3633 on July 17, 2025, by a vote of 294-134, but the Senate procedure dragged on for months. Polymarket chances of the CLARITY Act becoming law in 2026 surged from 46% to just under 62% after the weekend news as traders priced in a clearer route toward Senate action.
If the bill passes out of the Banking Committee, it will have to be reconciled with a rival version being championed by the Senate Agriculture Committee before heading to the entire Senate floor. That Senate measure would then need to be resolved with the House version.
The bill would also have to survive committee markup, floor votes in the Senate and House, and be signed into law by the president.
The Bottom Line
This deal is a watershed moment – not only for stablecoins, but for the wider validity of digital assets in the U.S. financial system.” The GENIUS Act was a major victory for the industry, as it was the first major piece of U.S. legislation to regulate a portion of the crypto industry. However, the GENIUS Act was meant to be the first part of a one-two policy punch that would end with the CLARITY Act — one that would eliminate regulatory uncertainty for investors who have been wary of the sector when fully implemented.
The stablecoin rewards fight is, for now, settled. The real question is how quickly Washington can turn this hard-won deal into enacted law.
Source Links
- CNBC — Circle jumps on CLARITY Act compromise
- CoinDesk — CLARITY Act text lets crypto firms offer stablecoin rewards
- The Block — Coinbase says deal reached on CLARITY Act stablecoin yield
- Ledger Insights — CLARITY Act deal on stablecoin yield: a compromise
- Daily Crypto Briefs — Coinbase reaches deal on CLARITY Act
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