Republican and Democratic senators have reached a deal to limit interest on stablecoins to protect traditional bank deposits.
Senator Thom Tillis and Senator Angela Alsobrooks reached a major agreement in principle on March 20, 2026. Therefore, this deal helps the CLARITY Act move ahead in the United States Senate. Specifically, the focus of compromise is on how digital currency companies can reward their users.
Lawmakers Distinguish Between Passive Interest and Active Rewards for Users
Furthermore, in the new agreement, interest payments on idle stablecoin balances would be banned for all users. This means digital coins cannot serve as traditional bank savings accounts and provide passive income. Thus, the government does not want people to move all their money out of banks.
Related Reading: Lummis Backs CLARITY Act for U.S. Crypto Lead
Additionally, lawmakers agreed to permit a reward associated with a particular user action within the market. Specifically, users can still receive rewards for performing transactions, transfers or providing liquidity to protocols. Consequently, this “activity-based” exception aids many crypto firms in retaining current business models.
Of particular interest, the Office of the Comptroller of the Currency will develop rules to prevent evasion. Because of this, issuers cannot employ partners or third-party groups to get around the yield ban. Thus, the new rules will guarantee that the ban is effective throughout the industry.
Groups like the American Bankers Association complained that high-yielding coins might lead to massive deposit flight. Specifically, some estimates put the total deposits lost by banks at as much as 6.6 trillion dollars. For this reason, the banking industry lobbied for rigour in terms of unregulated digital interest.
Furthermore, some companies such as Coinbase initially resisted the strict bans during the early stages of negotiation. Specifically, stablecoin rewards have accounted for as much as 20% of their quarterly revenue in the last few years. As a result, the new activity-based carveout is a compromise between these large exchanges.
US Stablecoin Framework Closer as Senate Clears First Hurdle
Moreover, Senator Tillis and Senator Alsobrooks want to get the Clarity Act passed before the midterm elections. Therefore, the legislative timeline is very tight for the House and Senate. Thus, the lawmakers are working fast to complete the remaining parts of the crypto bill.
However, there are still some hurdles to clear in terms of ethics provisions for elected officials and their families. Specifically, some people would like to prevent politicians from having any private crypto interests. As a result, this debate might delay the final approval of the CLARITY act in 2026.
Additionally, the liability of software developers in decentralized finance is still a very hot topic. For this reason, leaders need to determine whether creators are liable for illegal activity on protocols. Therefore, the House and Senate are required to reconcile their respective versions of the bill in the near future.
Ultimately, the yield dispute proved to be the first of the major dominoes to fall in these complex negotiations. Specifically, the agreement indicates that both sides are open to making compromises in the area of digital asset rules. Because of this, the US could very well have a framework for all stablecoins in the near future.
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