Coinbase says stablecoin yield deal clears path for Senate Clarity Act markup

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Coinbase stablecoin Clarity Act

Highlights

Senators Thom Tillis and Angela Alsobrooks agreed on a Clarity Act provision barring interest payments on stablecoins, clearing the way for Senate Banking Committee markup.
The compromise preserves Coinbase's ability to offer activity-based stablecoin rewards despite banks' push for tighter limits, directly impacting its $1.35 billion stablecoin revenue from USDC.
The bill prohibits marketing stablecoins as investment products or FDIC-insured, imposing civil penalties up to $5 million per violation, with new SEC, CFTC, and Treasury rules due within a year.

Compromise text and Senate path

Punchbowl News first reported the text after Coinbase said on Friday that lawmakers reached a deal on the provision that has delayed the Clarity Act for months. Senators Thom Tillis and Angela Alsobrooks finalize the compromise on Friday evening, potentially clearing the way for a long-stalled Senate Banking Committee markup.

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. Covered parties include digital asset service providers and their affiliates, while permitted stablecoin issuers and registered foreign issuers are excluded because they are already barred from paying direct interest under the GENIUS Act.

The prohibition does not apply to activity-based or transaction-based rewards tied to bona fide activities. The Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Secretary are directed to jointly issue rules within one year defining a non-exhaustive list of permitted activities, which are expected to include payments, transfers, market-making, staking, governance and loyalty programs.

The bill also says permitted activity-based rewards may be calculated by reference to a balance, duration, tenure, or a combination of those factors. Coinbase Chief Policy Officer Faryar Shirzad says on X that banks secured tighter limits on rewards, but crypto firms preserved the ability for Americans to earn rewards based on real usage of crypto platforms and networks, while Chief Executive Brian Armstrong urges the Senate Banking Committee to "mark it up."

Commercial stakes and wider industry impact

The agreement closes a standoff that has repeatedly disrupted progress on the broader market structure measure. The Senate Banking Committee canceled a planned January markup after Coinbase withdrew support over earlier yield language, and the exchange later rejected another draft in late March that sent Circle shares down 20% in a single session.

For Coinbase, the outcome has direct revenue implications. The company reported $1.35 billion in stablecoin revenue in 2025, much of it linked to rewards-driven distribution payments from its USDC partnership with Circle, and it is set to report first-quarter earnings on May 7.

Beyond the yield restrictions, the new text adds compliance and disclosure requirements across the sector. Covered parties cannot market stablecoins as investment products, claim they are backed by the full faith and credit of the United States, or say they are FDIC-insured, while violations can bring civil penalties of up to $5 million per violation assessed by the Treasury Department.

Our earlier coverage of the U.S. Senate’s Clarity Act compromise explained how lawmakers drew new boundaries around stablecoin rewards to prevent tokens from competing directly with bank deposits. The updated text would bar covered parties from paying interest or yield solely for holding stablecoins, while still allowing incentives tied to bona fide transactions and activities so rewards programs don’t function like deposit interest.

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