The Senate Banking Committee is set to begin marking up the Clarity Act on May 15, 2026. Crypto industry representatives have told reporters that the bill's stablecoin yield restrictions contain enough structural gaps to be largely unenforceable.

The legislation formally prohibits any covered party from paying interest, yield, or anything functionally equivalent to deposit interest on stablecoins. The provision reaches beyond issuers to encompass exchanges, wallets, and other distribution entities, a scope that makes the legal exposure considerably broader than the issuer-focused framing that has dominated public debate.

But a provision protecting rewards tied to "bona fide activities or bona fide transactions" has opened a lane that industry participants say is wide enough to drive a product line through.

"There are so many loopholes in the CLARITY Act when it comes to stablecoin yields that the genie is kind of out of the bottle already," one crypto company representative told CoinDesk in March, speaking without attribution.

The comment reflects a broader posture from the industry: firms plan to shift users from passive holding toward active platform participation, converting what would have been interest payments into transaction-based rebates, loyalty credits, and similar instruments. The model, as described by executives and industry representatives, resembles credit card reward points more than bank deposit interest, which is precisely the framing the bill's carve-out uses.

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What the bill actually says

Section 404 of the Clarity Act bars any "covered party" from paying interest, yield, or anything economically equivalent to interest on a stablecoin balance. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) negotiated the compromise language that preserved the activity-based rewards carve-out, clearing the path for committee consideration. The Clarity Act builds directly on the GENIUS Act, the first major stablecoin-specific bill to advance through the Senate, which left distribution channels in a grey zone that the new legislation attempts to close.

Coinbase CEO Brian Armstrong responded to the compromise text with two words posted publicly: "Mark it up." Chief Legal Officer Paul Grewal said the language "preserves activity-based rewards tied to real participation on crypto platforms." Circle Chief Strategy Officer Dante Disparte called the compromise meaningful progress, noting: "Today's compromise on stablecoin yield marks meaningful progress in the CLARITY Act negotiations."

Markets took note. Circle's stock rose roughly 20% on May 4, days after the compromise text was released on May 1, and Coinbase gained about 6%.

The financial stakes are not abstract for either company. According to Circle's IPO filing, Coinbase collects 100% of reserve income from USDC held on its platform and splits remaining reserve income 50/50 with Circle. Coinbase reported $1.35 billion in stablecoin revenue in 2025, up from $910 million in 2024, making it the company's second-largest revenue line after trading fees.

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Banks are not convinced

A coalition of six banking groups sent a joint letter to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren warning that the current language could pull significant deposits out of the traditional banking system. The coalition was led by the American Bankers Association and included the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, the Independent Community Bankers of America, and the NBA.

The groups estimated that deposit outflows triggered by yield-equivalent stablecoin products could reduce consumer, small business, and agricultural lending by "one-fifth or more." Their argument: ambiguous language around "bona fide activities" gives platforms cover to offer products that function, in economic terms, similarly to savings accounts but without federal deposit insurance protections. The coalition's own submitted language warned that "ambiguities in the current language could incentivize customers to shift funds out of the banking system."

The global stablecoin market reached $322.7 billion in May 2026. Tether (USDT) holds the largest share at roughly $189.6 billion, followed by USDC at approximately $77.6 billion. The scale makes the banks' concern credible.

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What this means outside the United States

The structural debate in Washington carries practical weight in markets where stablecoins are not investment products but basic financial infrastructure. Sub-Saharan Africa processed more than $205 billion in on-chain crypto value between July 2024 and June 2025, a 52% year-over-year increase. Stablecoins account for 43% of that volume. In Nigeria, where the naira lost more than 75% of its value between 2019 and 2024, dollar-pegged assets fill a gap that local banks simply cannot. An unnamed African exchange CEO put it plainly: "The banks do not have dollars, the government does not have dollars, and even if they did, they would not give them to you."

If the Clarity Act permits activity-based rewards, Coinbase, which is expanding USDC infrastructure across Nigeria, Ghana, and other African markets through its Circle Payment Network partnership, could eventually extend loyalty-style incentives to users there. If the rules tighten, global platforms may strip rewards programs for non-US users to limit compliance exposure.

Africa's regulatory environment is itself evolving. Kenya's Virtual Asset Service Providers Act, enacted in October 2025, places oversight under the Central Bank of Kenya and the Capital Markets Authority but does not yet address stablecoin yield. That incremental framework signals a materially different trajectory from the outright hostility toward private stablecoins that prevails across much of South Asia.

Meanwhile, India remains gridlocked. The Reserve Bank of India continues to push its own digital rupee over private stablecoins, and the Finance Ministry's crypto discussion paper has again stalled. Indian users typically access USDT and USDC through offshore platforms, in part as a workaround to India's existing 30% crypto tax regime, with no clear guidance on how any rewards would be taxed. On May 12, 2026, Zerodha co-founder Nithin Kamath went public with the view that "dollar-backed stablecoins are a bad idea for India." Users in Pakistan, Bangladesh, and Sri Lanka face similar ambiguity, accessing offshore platforms with no clear tax or regulatory framework for stablecoin rewards.

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What comes next

Treasury and the CFTC have one year after enactment to define "bona fide activity," which means the most consequential rulemaking will happen long after any Senate vote. Prediction markets gave the bill roughly a 60% chance of passing in 2026 as of markup week, a figure that reflects real uncertainty. More than 130 amendments were filed ahead of the committee session, including 44 from Senator Elizabeth Warren, with ethics provisions tied to President Trump's crypto interests presenting a separate threat to the bill's timeline.

The US framework also sits in direct tension with the rules taking shape elsewhere. The European Union's Markets in Crypto-Assets regulation, known as MiCA, explicitly bans stablecoin interest payments, placing the EU at the restrictive end of the global spectrum. Hong Kong's licensing model permits returns under certain conditions. The United Arab Emirates has adopted rules that allow activity-based rewards, a structure that closely mirrors the Clarity Act's carve-out. The United Kingdom maintains implicit restrictions without a comprehensive stablecoin-specific regime yet in place. The alignment between the US compromise and UAE practice, and the divergence from EU rules, will directly shape where global platforms choose to structure their rewards programs and what non-US users can ultimately expect to receive.

Until Treasury and the CFTC write the rules, the gap between what the legislation prohibits and what firms plan to offer will remain the defining feature of the US stablecoin framework.