CLARITY Act Faces Key Markup as Senate Weighs Stablecoin Yield

Key Insights:

• CLARITY Act heads into a key Senate Banking Committee markup.
• Stablecoin rewards ban passive yield but allow transaction-based incentives.
• BRCA and Keep Your Coins provisions cover developers and self-custody rights

The CLARITY Act is facing a major test in the U.S. Senate Banking Committee as lawmakers debate a broad rewrite of digital asset rules. The bill aims to create the first permanent federal market structure for the American crypto industry. It also seeks to define how tokens, exchanges, stablecoins, banks, and developers should operate under U.S. law.

The committee released the updated market structure text ahead of its markup. It reflected discussions with lawmakers, regulators, financial institutions, law enforcement, innovators, and consumer groups.

The vote comes as the committee reviews more than 100 proposed amendments. These amendments cover stablecoin rewards, ethics rules, anti-money laundering controls, banking access, and DeFi protections.

Supporters say the bill could reduce uncertainty that has shaped U.S. crypto policy for years. Critics argue that the draft still needs stronger safeguards before it expands crypto activity across the financial system.

CLARITY Act Moves Forward After Talks Lose Bipartisan Ground

The CLARITY Act has secured enough committee support to advance, according to reports surrounding the markup. However, the process remains politically tense. Bipartisan talks reportedly stalled before the vote after lawmakers failed to resolve the final disputes.

The disagreements centered on ethics rules and the Blockchain Regulatory Certainty Act. Some Democrats want tougher conflict-of-interest limits. They also want tighter controls on crypto businesses tied to senior government officials or their families.

Senate Banking Chair Tim Scott is also expected to reject more than a dozen proposed amendments to the crypto bill due to drafting errors. The move could narrow the number of amendments debated during markup and push the process toward a more partisan vote.

It also adds pressure on Democrats, who filed several changes on ethics, anti-money laundering rules, and DeFi protections.

The BRCA section has also drawn attention. It would protect certain non-custodial software developers from federal and state money transmitter liability.

Supporters say this protects open-source builders who do not control customer funds. Critics argue that the language may create compliance gaps for decentralized finance.

Senator Cynthia Lummis has pushed for the bill to leave the committee while talks continue. Republican supporters argue that a delay could push digital asset activity overseas. They also say the US needs clear rules before another major market failure occurs.

The bill’s calendar is tight. Supporters want committee approval before the May 21 recess. After that, the measure would still need more Senate negotiations, including work with the Agriculture Committee. The White House has also pushed for faster progress before July 4.

CLARITY Act Stablecoin Rewards Language Draws Bank Pushback

The CLARITY Act includes one of its most debated compromises in the stablecoin section. The draft bars passive interest or yield for simply holding payment stablecoins. However, it allows rewards tied to transactions, platform activity, or other approved uses.

This language tries to separate stablecoin payments from bank deposit products. Crypto firms say the compromise keeps payment innovation alive. Banking groups say the wording still leaves room for interest-like rewards that could compete with insured savings accounts.

The American Bankers Association and other bank groups have pushed lawmakers to tighten the text. Their concern is simple. If stablecoin issuers or exchanges can offer rewards, customers may move funds away from banks.

Crypto supporters reject that view. They argue that payment stablecoins need flexible incentives to compete with traditional finance. They also say blanket restrictions could weaken US firms against foreign platforms.

Senator Elizabeth Warren and other Democrats filed many amendments before the markup. Several focus on anti-money laundering rules, national security concerns, and banking access. Warren’s amendments also target parts of the bill that critics say could help crypto firms avoid stricter supervision.

The stablecoin fight shows the deeper divide inside the crypto market structure bill. Lawmakers broadly agree that digital assets need clearer rules. They disagree over how much freedom crypto firms should receive inside the financial system.

CLARITY Act Gains Support from Coinbase, Fidelity, and Ripple

The CLARITY Act has gained strong support from major crypto and finance executives. Coinbase CEO Brian Armstrong called the bill strong and said it could make the US financial system faster, cheaper, and more open. Coinbase’s legal chief, Paul Grewal, also posted that America needs clarity.

Fidelity has also backed the committee’s approach. The asset manager said statutory clarity could support investors and regulated financial firms. Ripple CEO Brad Garlinghouse praised Senate Banking leaders and said Americans in crypto deserve clear protections.

Industry support matters because the bill could reshape daily operations for exchanges, custodians, developers, and token issuers. It would also define when digital assets fall under securities law or commodities oversight.

The proposal would give the CFTC a larger role in many digital commodity markets. At the same time, tokenized securities would remain tied to securities law. That split aims to reduce legal uncertainty after years of enforcement-led regulation.

The bill also includes self-custody protections under “Keep Your Coins” provisions. These rules would protect the lawful use of independent wallets. Supporters say this section preserves a core principle of digital asset ownership.

Still, the bill faces a difficult path. A party-line vote could weaken its chances in the full Senate. A broader deal would give the measure stronger momentum and make final passage more likely in 2026.

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