Senators Thom Tillis and Angela Alsobrooks have signaled that the stablecoin yield compromise in the CLARITY Act is final, despite continued opposition from major US banking associations. On May 5, the senators released a joint statement claiming both sides have worked in good faith to address banking industry concerns over deposit flight. Senator Tillis stated that the deal prohibits stablecoin yields or rewards that are 'economically or functionally equivalent' to interests on bank deposits, addressing the banking industry's core concern. The compromise allows crypto companies to offer activity-based or transaction-based rewards for participation such as trading, staking, or other on-platform activities, while restricting passive yield-bearing stablecoins. In their latest joint statement, the senators acknowledged that 'Some in the banking industry may not want either of these things to happen, and we respectfully agree to disagree.'
Major US banking associations have publicly rejected the finalized stablecoin yield compromise brokered by Senators Tillis and Alsobrooks in the CLARITY Act. According to reports from Standard Chartered, banking groups argued the deal introduces systemic risk to traditional financial institutions, warning that yield-bearing stablecoins could drain trillions from the deposit base. Standard Chartered analysts estimated the risk at up to $500 billion in deposit flight by 2028 if an open-ended yield provision were allowed. In their joint statement, the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America stated that the revised provisions 'fall short' of preventing deposit flight despite efforts by lawmakers to address the issue. Banking groups took umbrage with the text, stating it 'falls short of the goal' of a blanket prohibition on stablecoin rewards.
In stark contrast to banking associations, Coinbase and Circle both backed the finalized compromise immediately after it was announced. As reported by Standard Chartered, Coinbase CEO Brian Armstrong posted 'Mark it up' after the text dropped, and Chief Legal Officer Paul Grewal said the language preserves activity-based rewards tied to real platform participation. Coinbase CLO Paul Grewal reacted to the finalized statement, congratulating the banking trades for bringing Republicans and Democrats together. Coinbase Chief Policy Officer Faryar Shirzad was upbeat about the compromise, writing on social media that 'In the end, the banks were able to get more restrictions on rewards, but we protected what matters — the ability for Americans to earn rewards, based on real usage of crypto platforms and networks.' The split between traditional finance and crypto trade groups now sits at the centre of the committee's deliberations, with support from crypto firms having begun to stabilize following earlier setbacks.
The finalized compromise gives the SEC, CFTC, and Treasury twelve months to define exactly what reward programs are permissible under the new language. Senator Tim Scott, Chairman of the US Senate Banking Committee, announced 'We are making real progress on digital asset market legislation and restoring confidence in our economy.' He pointed to pushing for the CLARITY Act markup in May, potentially leading to a full Senate vote in June or July. The Senate Banking Committee could hold a markup as early as mid or late May, with the crypto market structure bill heading to President Trump if passed. Polymarket odds for the CLARITY Act signed into law in 2026 have climbed to 70% for the first time in a month, reflecting growing confidence in the bill's passage. After months of delays and negotiations, crypto appears to be happy with a compromise on stablecoin rewards in the Senate's latest draft text.
The dispute over stablecoin rewards has slowed progress on the broader market structure bill, which passed the House with a 294–134 vote but still faces hurdles in the Senate. Economist Andrew Nigrinis warned that large-scale stablecoin adoption could trigger trillions in outflows from the U.S. banking system, with community banks facing the most strain due to limited balance-sheet flexibility. However, White House economists presented more limited impact estimates, finding that banning stablecoin yield could raise bank lending by about $2.1 billion, equivalent to roughly 0.02%, indicating only a marginal effect on credit expansion. Circle stock price surged 20% as senators signaled the stablecoin yield compromise is finalized, with Senator Cynthia Lummis asserting the deal is 'finalized' and the CLARITY Act's passage is near. The development pushed Bitcoin back above $81,000 for the first time in months, with traders appearing more optimistic about the Clarity Act's passage this year, which some market experts have said would boost crypto prices.
