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CLARITY Act Draft Adds Stablecoin Yield, DeFi Rules Before Vote
The 309-page bill's provisions on stablecoin yield and decentralized finance could reshape crypto regulation. The committee markup this week is the next catalyst for market direction.
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The Senate Banking Committee released the latest draft of the CLARITY Act shortly after midnight on Tuesday, a 309-page crypto market structure bill that now includes provisions on stablecoin yield, decentralized finance, consumer protections, and anti-money laundering. The draft sets up a committee markup later this week, accelerating a legislative effort that could define digital-asset oversight inside the US financial system for years.
The bill’s core premise is to give digital assets a federal regulatory home. Earlier versions focused on exchange registration and custody. The new stablecoin yield language signals lawmakers are zeroing in on interest-bearing stable products, a category that has drawn fire from banking regulators worried about deposit flight. The DeFi additions indicate an intent to bring decentralized protocols inside the perimeter, a move that would fundamentally change how those projects operate.
Stablecoin Yield Provision Reopens a Fraught Debate
The yield provision lands while a separate stablecoin bill remains stalled over precisely this issue. In late 2023, a compromise that would have allowed limited stablecoin rewards almost broke a Senate stalemate, as we noted in our coverage of the stablecoin rewards fight. The banking lobby, including the American Bankers Association, has argued that yield-bearing stablecoins could drain trillions from bank deposits, a concern we detailed in an earlier report on ABA’s $2T warning. By writing yield rules directly into the CLARITY Act, the committee is forcing that debate into a bill with broader industry support, raising the stakes for both sides.
For traders, the immediate question is how the language treats interest relative to bank deposit insurance. A permissive framework would benefit Circle and other yield-seeking stablecoin issuers. Language that classifies yield stablecoins as securities or imposes a blanket ban would unwind that trade quickly. The draft’s text will be parsed for definitions of “payment stablecoin” and whether yield-bearing tokens qualify.