Senate Banking Committee Expected to Advance CLARITY Act After Stablecoin Compromise

The CLARITY Act is advancing toward a critical procedural test after Senate negotiators released compromise language on stablecoin rewards last week. This development has raised expectations that the Senate Banking Committee could take up the measure as early as the week of May 11.

Alex Thorn, head of research at Galaxy Digital, described the release of text from Sens. Thom Tillis and Angela Alsobrooks as a positive signal for an upcoming markup vote. While Thorn noted the compromise had been anticipated, he emphasized that publishing the language made a near-term committee vote more plausible. The timing has become pivotal for the Digital Asset Market Clarity Act, commonly referred to as the CLARITY Act, after months of debate over whether crypto companies can offer customers rewards tied to stablecoins.

As of Monday, the Senate Banking Committee had not posted a May markup of the bill on its public markup page. However, the difference between an early-May markup and another delay could determine whether Congress has sufficient time to send the measure to President Donald Trump before the election calendar dominates the Senate’s agenda.

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Stablecoin Rewards: The Core Dispute

The CLARITY Act had been at an impasse since January, primarily due to disagreements over stablecoin rewards. Banks argued that such rewards could function like interest on deposits, potentially diverting funds from regulated lenders and weakening their ability to issue loans. In contrast, crypto firms contended that a broad ban would shield banks from competition and restrict incentives for customers tied to payments, loyalty programs, or platform activity.

These disagreements led the Senate Banking Committee to postpone debate on the bill in January. In response, the White House spearheaded a concerted effort to ensure the bill’s progress, resulting in a new compromise legislative draft brokered by Tillis and Alsobrooks. The revised language strengthens protections for banks against yield-like products while prohibiting rewards that are economically or functionally equivalent to interest on bank deposits.

The text also directs regulators to develop stablecoin rules, including requirements for disclosures and a list of permitted reward activities.

Industry Response and Implications

Faryar Shirzad, Coinbase’s chief policy officer, highlighted that crypto companies retained the ability for Americans to earn rewards based on actual usage of crypto platforms and networks. Shirzad stated:

“We protected what matters – the ability for Americans to earn rewards, based on real usage of crypto platforms and networks. We also ensured the US can be at the forefront of the financial system – which in this competitive geopolitical era is paramount. That’s important for innovation, consumers and America's national security.”

Notably, Coinbase had been one of the most vocal opponents of the January draft. Its shift in stance removes a significant industry obstacle, signaling broader support for the compromise.