- Members of the Senate Banking Committee confirmed that banks and crypto representatives have already reached a compromise on stablecoin yields.
- The deal bans stablecoin yields that resemble bank deposits, while allowing crypto rewards that don’t violate the said restrictions.
The banks achieved a win on the stablecoin yield restriction in the Digital Asset Market Clarity Act of 2025 (CLARITY Act) ahead of its markup. However, the Senate Banking Committee has allowed several provisions favoring the cryptocurrency sector in a compromise deal.
Bitcoin (BTC) continued to rally above $81K per coin on the way to Tuesday, briefly reclaiming its $1.62 trillion market cap before settling at $80K per coin as of writing. Coinciding with the uptrend is the positive development in the debate around Section 404 of the CLARITY Act.
Stable Yield Restriction Prevails
Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) recently released their statements on several media outlets. The lawmakers confirmed that they have already talked with all stakeholders from the banking and crypto sectors to arrive at “a substantially improved, consensus-based product.”
The senators claimed the Committee has indeed agreed to the bank and trade groups’ request for stablecoin yield restrictions. The measure, according to proponents from traditional finance (TradFi), aims to prevent a massive deposit flight from banks and legacy financial institutions to stablecoins.
Bank of America and JPMorgan earlier warned that the ensuing capital flight from stablecoin yields would redirect over $6 trillion into digital assets. Meanwhile, Standard Chartered estimated the numbers at around $500 billion.
The representatives from TradFi argued that the trend would ultimately affect the lending industry, leading to lower liquidity and higher fees for borrowers. Additionally, they claimed that community banks would take the largest hit under such a scenario.
To appease the banks, the Committee ironed out a compromise restricting stablecoin yields on idle holdings or activities “resembling interest on bank deposits.”
Other Forms of Crypto Rewards Allowed
On the other hand, the Committee permitted customer rewards for crypto companies. These include cashbacks, loyalty points, rebates, and other features that don’t contradict the aforementioned provision on stablecoin yield restrictions.
The lawmakers argued that some in the banking industry may remain adversarial to the compromise, but said, “We respectfully agree to disagree.”
Thillis and Alsobrooks believe that a compromise is the only way to establish regulatory clarity and foster innovation in digital assets. They highlighted that they have worked in good faith with the parties involved in the talks to reach a middle-ground and “avoid letting the perfect become the enemy of the good.
Some members of the crypto community, however, expressed their disdain for the lopsided deal. They warned that excessive restrictions would hinder the USA’s goal of becoming the “crypto capital of the world” and risk giving other areas with more favorable regulations on digital assets, such as Dubai or Hong Kong, a significant advantage.
