Stablecoin yield deal revives Clarity Act with Coinbase on board

Senators have a deal on stablecoin yield. Punchbowl News reported Friday evening that the agreement limits when stablecoin holders can earn interest or rewards. Coinbase is back on board. Chief Executive Brian Armstrong's two-word answer, "Mark it up," was enough.

Armstrong pulled his support in January over how the bill treated stablecoins, forcing Chair Tim Scott to postpone the session. Negotiators returned to the table. The deal pushed Polymarket odds of the Clarity Act passing in 2026 to 64%, according to DL News. They had been at 46%.

The dispute turned on the distinction between interest and incentives. Last year's GENIUS Act barred stablecoin issuers from paying yield but left open whether exchanges and other third parties could pay it. Banks pushed for the Clarity Act to close that opening, worried that stablecoin rates would lure deposits out of checking and savings accounts. The January compromise prohibited passive yield while allowing rewards for transactions, payments, remittances and DeFi liquidity. The latest draft keeps that structure. Interest is banned if it is "economically or functionally equivalent" to what a bank deposit pays. "Rewards or incentives" for "bona fide" activities stay permissible.

The line now belongs to regulators. The bill gives them a year to write rules specifying which rewards qualify. The practical meaning of the compromise will be settled after the markup, not during it. Blockchain Association CEO Summer Mersinger called the agreement "a step in the right direction" that "clears the path" to a vote.

Institutional stablecoin users will have to wait for the details. The deal protects the traditional deposit base while preserving rewards for active transactions. The fine print will be written by regulators. Nic Carter's verdict — "The banks won" — may be the durable one. The industry gets its markup, and the deposit franchise gets its wall. Now the rulemaking begins.