Stablecoin yield deal breaks the Clarity Act impasse

Friday evening, Punchbowl News reported that senators had reached a deal limiting interest and yield on stablecoins, breaking the four-month impasse on the Clarity Act. Coinbase CEO Brian Armstrong, who pulled his support on the eve of a January markup and sent the bill back to negotiations, has reversed himself: "Mark it up." Polymarket traders now give the bill a 64% chance of passing in 2026. Before the deal, the number was 46%.

The agreement settles a fight that dates to last year's GENIUS Act, which barred stablecoin issuers from paying yield but left a gray area for exchanges and other third parties. Banks worried customers would park money in interest-bearing digital dollars, so they pushed the Clarity Act to close that opening. The latest draft prohibits payments "economically or functionally equivalent" to bank deposit interest, while preserving rewards tied to "bona fide" activity: trading, transfers, remittances, and DeFi liquidity. Regulators get a year to draw the line.

Nic Carter put it bluntly: "The banks won." Yet the carve-out is a real concession. Exchanges can still reward activity, as long as the incentives are not tied to holding. Where that line sits will be decided in rulemaking, not in the bill's language. Summer Mersinger, CEO of the Blockchain Association, said the agreement "clears the path" to a markup. It does. The hard part is the rulemaking that follows.

Institutional stablecoin users, then, still get no yield from holding digital dollars. The appeal remains settlement, payments, and collateral, not cash management. Exchanges get a defined tool for customer engagement, but its durability depends on definitions that have yet to be written. Over the next year, regulators will decide what "bona fide" means.