Coinbase and Senate Leaders Reach Compromise on Stablecoin Reward Provisions in CLARITY Act

U.S. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) released compromise text on May 1, 2026, for the Digital Asset Market Clarity Act after months of negotiations between Coinbase, banking lobbyists, and Senate leaders. The deal prohibits stablecoin issuers from offering yield based solely on holding reserves—addressing banking industry concerns about competition with deposit products—while allowing rewards tied to bona fide transactions and activities. Coinbase CEO Brian Armstrong endorsed the compromise, with chief legal officer Paul Grewal stating it preserves activity-based rewards, though crypto firms must shift from 'buy and hold' to 'buy and use' models. The agreement directs Treasury and the CFTC to launch rulemaking within one year and likely clears the path for a Senate Banking Committee markup to advance the legislation.

Compromise on Stablecoin Yield Restrictions in CLARITY Act

• ▪Senators Alsobrooks and Tillis negotiated details of the Digital Asset Market Clarity Act text for several months after a Senate Banking Committee markup was postponed in January 2026
• ▪In March 2026, Senators Alsobrooks and Tillis announced they had struck an agreement blocking crypto firms from offering yield resembling deposit interest while allowing rewards programs
• ▪The Digital Asset Market Clarity Act prohibits covered parties from paying interest or yield to restricted recipients solely in connection with holding payment stablecoins
• ▪The Digital Asset Market Clarity Act stablecoin yield restrictions do apply to loyalty programs
• ▪The Digital Asset Market Clarity Act text states that stablecoin issuers offering services similar to depository institutions may inhibit these institutions
• ▪The Digital Asset Market Clarity Act compromise bans stablecoin issuers from offering yield based solely on holding stablecoin reserves
• ▪The Digital Asset Market Clarity Act allows stablecoin yield incentives based on bona fide activities or bona fide transactions that differ from interest-bearing bank deposits
• ▪The Digital Asset Market Clarity Act compromise text was released on May 1, 2026
• ▪U.S. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) negotiated the compromise on the Digital Asset Market Clarity Act stablecoin yield provisions

Coinbase's Response and Industry Implications

• ▪Coinbase CEO Brian Armstrong wrote 'Mark it up' on social media site X in response to the Digital Asset Market Clarity Act compromise
• ▪Coinbase chief legal officer Paul Grewal stated the Digital Asset Market Clarity Act language preserves activity-based rewards tied to real participation on crypto platforms and networks
• ▪Digital Chamber CEO Cody Carbone stated the organization welcomes the public release of stablecoin yield language as an important step toward resolving issues before a Senate Banking Committee markup
• ▪Paul Grewal stated Coinbase is satisfied that the Digital Asset Market Clarity Act language should not be the basis of any objection
• ▪Bank lobbyists and crypto insiders have been weighing in on the Digital Asset Market Clarity Act compromise effort, sometimes in sessions hosted by the White House

Regulatory Framework and Implementation Details

• ▪The Digital Asset Market Clarity Act text includes anti-evasion language
• ▪The Digital Asset Market Clarity Act directs the Treasury Department and Commodity Futures Trading Commission to launch a rulemaking within one year of the bill becoming law to clarify how crypto firms can offer yield
• ▪Corey Frayer is director of investor protection at the Consumer Federation of America
• ▪The Digital Asset Market Clarity Act compromise agreement likely clears the way for a Senate Banking Committee markup hearing to advance the legislation