Stablecoin yields will be banned under a newly released agreement addressing a controversial part of the crypto market structure law that is broadly similar to what has been discussed since the beginning of the year.
A new section of the proposed Digital Asset Market Clarity Act text released Friday revealed that the compromise reached by U.S. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) would prohibit stablecoin issuers from offering yield based solely on holding stablecoin reserves. It argues that “depository institutions provide financial services that are integral to the strength of the U.S. economy,” and stablecoin issuers providing similar services could “disrupt” these institutions.
Coming to an agreement means there is nothing in the way of a Senate Banking Committee hearing (known as markup) that could ultimately lead to another significant step in progressing the legislation through the Senate, although there are several other negotiating points that have not been publicly resolved.
Coinbase CEO Brian Armstrong on social media site
Paul Grewal, Coinbase’s chief legal officer, said in a separate post that the language “preserves the activity-based rewards tied to actual participation on crypto platforms and networks that the bank lobby said they wanted,” adding that “we are focused on crafting a bill and are satisfied that this language should not be the basis for any objections.”
In its legal form, the new text reads, “No Covered Party shall, directly or indirectly, pay to a Restricted Recipient any form of interest on yield (whether in the form of cash, tokens, or other consideration)— (a) solely in connection with such Restricted Recipient’s holding of payment stablecoins; or (b) payments on stablecoin balances in a manner that is economically or functionally equivalent to the payment of interest or yield on interest-bearing bank deposits.”
The text states that this restriction does not apply to incentives “based on true activities or actual transactions” that differ from the yield generated from interest-bearing bank deposits, maintaining an approach to rewards similar to what financial companies offer on credit card activity. The ban applies to loyalty programs or similar efforts.
One person at a crypto company said this would require digital asset firms to restructure how they provide yields, moving from a “buy and hold” system to a “buy and use” system to meet transaction warnings in text.
It’s hard to say how exactly this might work, the person said, pointing to rulemaking provisions in the text that direct the Treasury Department and the Commodity Futures Trading Commission to create a rule within a year of the bill becoming law that more clearly spells out how and when crypto companies can offer yield.
Corey Fryer, director of investor protection at the Consumer Federation of America, said the way the rulemaking provision is worded could give regulators leeway in defining what crypto companies can do with yield products. He said the wording of the rulemaking section could allow crypto firms to conduct activities and then pay returns to clients. The wording in the section allows regulators to consider balance amount, period and tenure as a factor in award calculations. Other factors that will be considered include the definition of the activity and whether any type of incentive program is used.
The text also includes anti-piracy language.
Senators Alsobrooks and Tillis have been negotiating the details of the text for the past few months after the Senate Banking Committee markup on the Overall Clarity Act was postponed at the last minute in January. Since then, bank lobbyists and crypto insiders have been discussing the compromise effort, sometimes in sessions hosted by the White House.
In March, lawmakers said they had struck a compromise that barred crypto companies from offering yields that look like deposit interest, but allowed them to structure rewards programs that don’t rival banks’ core products.
In a statement, Digital Chamber CEO Cody Carbone said the trade association “welcomes the public release of the stablecoin yield language as an important step toward resolving one of the last issues standing between regulation and markup. We are encouraged to see this process moving forward and will continue to advocate for the power of rewards to drive consumer utility, competition, and innovation in the digital asset ecosystem.”
UPDATE (May 1, 2026, 21:54 UTC): Adds comments from Coinbase officials.
UPDATE (May 1, 2026, 22:26 UTC): Adds additional details.
UPDATE (May 1, 2026, 23:31 UTC): Adds additional details.