The CLARITY Act compromise released by Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) on May 1, 2026, has significantly boosted crypto market sentiment. Coinbase's chief policy officer, Faryar Shirzad, publicly released the final text on May 4, signaling the company's renewed alignment with the Senate draft after withdrawing support in mid-January 2026. Following the compromise release, Polymarket probabilities for the bill's 2026 passage rose from 46.0% to 64.0%, reflecting a rapid re-pricing of legislative risk. Crypto stocks rallied across the sector in response to the improved passage odds, with the Senate Banking Committee aiming to hold a markup during the week of May 11, 2026. Chairman Tim Scott has expressed hope for committee action in May followed by a Senate floor vote in June or July.
Coinbase confirmed on Friday that a deal has been reached on a key provision in the landmark crypto legislation that could clear the path for the bill to move forward in the U.S. Senate. The breakthrough addresses the primary obstacle that banks opposed a provision allowing stablecoin issuers and crypto firms to offer yield-bearing products and other rewards paid on stablecoins that could lure away bank deposits. As reported by Reuters, Coinbase's Chief Policy Officer Faryar Shirzad stated 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 compromise language includes a broad prohibition on rewards offered "in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit."
The CLARITY Act compromise establishes a one-year deadline for regulators to publish clarifying rules, including a list of permitted activities, required disclosures, and criteria defining usage-based incentives. The deal bans payments "economically or functionally equivalent" to interest on bank deposits while permitting rewards tied to bona fide activities such as transactions, payments, and decentralized finance (DeFi) liquidity provision. The text also directs regulators to propose a new series of stablecoin regulations, including the development of a new stablecoin disclosure regime and a list of permissible reward activities, as reported by Punchbowl News. Coinbase's reinstated support signals industry alignment with the compromise framework. The legislation must clear both the Senate Agriculture Committee and the Senate Banking Committee, with the agriculture committee having already passed its version.
The circulating supply of USDC, a major stablecoin, stands at $79 billion, a scale that issuers, holders, and regulators will monitor as new rules on permitted incentives take shape. Changes to allowable rewards could influence how these tokens are used in payments, lending, and DeFi protocols. Tensions remain among stakeholders with banks pushing for broader bans on yield to reduce competitive pressure, while crypto firms seek to preserve usage-based rewards. DeFi provisions, including developer protections, are still under negotiation. Industry groups have urged the committee to proceed without delay, with the window for legislative action narrowing considerably as the Senate Banking Committee aims to hold a markup during the week of May 11, 2026. The proposed Clarity Act aims to create clear regulations that should help promote cryptocurrency adoption after crypto companies have been operating in a regulatory gray area that executives say has stymied their businesses.
