Senate Strikes Stablecoin Compromise as Clarity Act Gains Momentum with Coinbase Backing

On Friday evening, Punchbowl News reported that U.S. senators had struck a deal to limit the payment of interest or yield on stablecoins, delivering an early holiday gift to the crypto industry.

Industry Reactions: From Skepticism to Support

Crypto investor Nic Carter summed up the sentiment with a blunt assessment: “The banks won.”

Attorney Scott Johnsson, general counsel at Van Buren Capital, struck a more optimistic tone, tweeting:

“This is fine. It may not feel like it, but it is.”

The most consequential reaction came from Coinbase CEO Brian Armstrong, who wrote on X: “Mark it up.” His statement signaled support for a markup—a committee vote that could advance the Clarity Act.

Clarity Act Gains Momentum After Coinbase Reversal

The odds of the Clarity Act passing in 2026 surged from 46% to 64% on Polymarket following Armstrong’s endorsement.

Recall that Armstrong had previously withdrawn his support in January, halting a scheduled markup. His dissatisfaction stemmed from the bill’s treatment of stablecoins. Senate Banking Committee Chair Tim Scott postponed the markup, prompting negotiators to revisit the legislation.

Stablecoin Yield Restrictions: A Recap

Last year’s GENIUS Act banned stablecoin issuers from paying yield or interest on customers’ digital dollars, a move driven by banks’ concerns over deposit flight to higher-yielding stablecoins.

However, the law left ambiguity: Would it prohibit third-party crypto companies, such as exchanges, from paying interest? Banks lobbied to close this loophole via the Clarity Act.

January’s compromise allowed companies to offer rewards or incentives tied to activities like transactions, payments, transfers, remittances, and DeFi liquidity provision—but banned passive yield.

Latest Draft Maintains Key Provisions

According to circulating drafts, the Clarity Act would prohibit interest or yield that is “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”

However, “rewards or incentives” for “bona fide” activities or transactions remain permitted. The bill grants U.S. financial regulators one year to publish clarifying rules on when such rewards are allowed.

Industry Hails Progress, But Challenges Remain

Blockchain Association CEO Summer Mersinger praised the compromise, stating:

“Resolving the stablecoin yield question clears the path to a Senate Banking Committee markup and brings us meaningfully closer to comprehensive market structure legislation becoming law. This agreement is a step in the right direction and we urge the Committee to move forward without delay.”

The markup could occur as soon as this month, but time is limited. The Senate’s draft must be reconciled with a version passed by the House nearly a year ago. Legislative progress is expected to slow as the election season intensifies.

Senate Banking Committee Chair Tim Scott expressed optimism on Monday, tweeting:

“We are making real progress on digital asset market legislation and restoring confidence in our economy.”