Senate negotiators have agreed on compromise language on stablecoin yield in an attempt to unblock the CLARITY Act after protracted debate between banks and crypto firms. The bipartisan deal was intended to close the gap between the two sides on an issue that had stalled progress for months. Earlier in April, US Secretary of the Treasury Scott Bessent had urged Congress to pass the CLARITY Act, which was introduced on May 29, 2025.
The debate as to whether crypto firms can offer rewards that work like deposit interest has been holding up broader legislation, which was originally slated for enforcement this spring. However, now that compromise text is public, the fintech sector has a clearer line of sight into how policymakers are likely to separate payments from yield products. Specifically, the agreement addresses stablecoin rewards and sets up legislation for a possible markup in the coming month.
While this doesn’t mean the debate has been fully solved, it does provide some clarity as to where future regulation might go. In its current form, the proposal would prohibit rewards offered in a way that’s “economically or functionally equivalent" to interest paid on a bank deposit. However, banking groups expressed concerns about possible loopholes, warning that poorly drafted rewards language could still encourage deposit flight.
The deposit-flight argument is the main business issue behind the politics. Traditional banks generally aren’t objecting to crypto on principle, but are worried that stablecoin products with quasi-interest features could end up competing directly with deposits—albeit without being subject to the same prudential obligations. Those concerns were central to the recent negotiations, which resulted in compromise language that removed a key obstacle to the CLARITY Act.
The proposed compromise would allow stablecoin rewards in the form of usage-based incentives, such as trading activity, while leaving the payment of savings account-like interest on passive stablecoin deposits to traditional banks. That’s an important distinction for fintechs involved in stablecoins, because it shows that regulators and lawmakers appear to be converging on a shared principle: stablecoins can be framed as payment and settlement instruments, but the closer rewards get to deposit-like interest, the more resistance they’ll provoke from bank-aligned policymakers.
While this compromise appears doesn’t guarantee the law’s final passage, it has started making product boundaries somewhat clearer. Activity-linked rewards may remain possible, but idle-balance yield resembling interest paid on a bank account looks increasingly difficult to defend. Indeed, little is certain as yet, and the conversation remains open-ended, especially since time pressure and midterm election politics could still slow the CLARITY Act’s final passage.
On a positive note, however, it does mean that compromise is becoming visible and, for crypto fintechs, that’s enough to influence decisioning around pricing, treasury strategy, and customer acquisition. Even for non-crypto fintechs, the development is still relevant, at least in the longer term—if stablecoins are going to become more clearly regulated as transaction tools rather than mere quasi-deposit products, that could reduce uncertainty around integrating them into payments workflows.