Senators try to unlock stalled crypto Clarity Act with compromise on stablecoin yield

• The American Bankers Association is lobbying in Washington to close any stablecoin yield loophole they see in the crypto Clarity Act, but senators at a summit today said they're working on a stablecoin compromise to advance that bill.
• Senators, crypto advocates and bankers seem to be in agreement on keeping rewards away from static holdings of stablecoins that resemble bank accounts, because such holdings may rival traditional bank savings accounts.
• The potential for a major 2026 crypto bill is still dependent on a lot of things going right, including the resolution of several final points of debate and a smooth run through a tight Senate calendar.

The U.S. banking industry had effectively lobbied to halt the crypto industry's market structure bill, the Digital Asset Market Clarity Act, over a dispute about the proper role for stablecoin rewards. But lawmakers continue to negotiate a compromise to move that legislation forward.

One of the lawmakers at the center of those talks, Senator Angela Alsobrooks, told an audience at an American Bankers Association summit in Washington on Tuesday, that both sides of the negotiation — bankers trying to limit most stablecoin rewards as a threat to traditional deposits and the crypto industry that argues they're an important consumer incentive — are going to be "just a little bit unhappy." The Maryland Democrat has been working with Senator Thom Tillis, a North Carolina Republican, to hash out a way to get a long-delayed Senate Banking Committee hearing on the legislation.

"The compromise that myself and Senator Tillis have been working on is one that we believe will allow us to have the guardrails in place that will help us to prevent — in all the ways we can — the deposit flight that we do not want to see happen, and to allow the innovation to grow at the same time," Alsobrooks said, referencing the banks' insistence that rewards on stablecoin holdings are so similar to bank deposits that people will take their money out of the banks.

"We absolutely have to have these protections to prevent the deposit flight, but we're going to probably have to make some compromises," the senator said.

So far, the compromise seems to focus on the possibility that some narrower area of stablecoin activity be eligible for customer rewards paid by crypto platforms.

Last year's stablecoin law, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, "barred payment stablecoin issuers from paying interest to attract customers," noted ABA President Rob Nichols. He argued that "unless crypto exchanges and other affiliated companies are bound by the same common-sense restrictions, the result is a clear effort to evade congressional intent."

Senator Mike Rounds, a South Dakota Republican who — like Alsobrooks and Tillis — is a member of the Senate Banking Committee, told the banks on Tuesday that he's "not sure" how to properly approach stablecoin rewards, yet. He said that handing out rewards to customers can't be about how much money is held in an account, but it might be tied to how active the account is.

"We're trying to reflect that in the discussions," he said.

The bankers, who were preparing Tuesday to disperse to meetings across Capitol Hill to make their points with lawmakers and staffs, have pushed for a very narrow allowance for rewards. But JPMorgan Chase & Co. CEO Jamie Dimon, the leader of the biggest U.S. institution, suggested in a recent interview that his industry could accept transaction-based rewards — a position that's been offered by the crypto industry in meetings at the White House.

The U.S. Office of the Comptroller of the Currency recently proposed a rule to adopt much of the GENIUS Act, though its position on stablecoin rewards was seen as murky by the crypto industry. The agency had said that it wouldn't allow evasions of the yield ban for stablecoin issuers. But industry insiders have expressed comfort that they'll be able to set up rewards programs that won't run afoul of the OCC's proposal, which the digital assets advocates say allows considerable room for rewards programs designed as customer incentives.

Despite the bankers further underlining the dangers of the yield loophole on their business model this week, the legislation could still advance if Alsobrooks, Tillis and others on the Senate Banking Committee are satisfied with new compromise language. The next step would be a markup hearing, like the one delayed earlier this year. If the bill passes that, it would be combined with a version that already cleared the Senate Agriculture Committee.

A final version would then be put before the entire Senate for a vote, which would require a considerable number of Democrats to pass.

That may remain a concern because other debates beyond stablecoin yield have gone unresolved. Senate Democrats have raised concerns about the decentralized finance (DeFi) sector posing vulnerabilities to bad actors, and they've also argued that Democrats be appointed to vacant roles at the CFTC and SEC. But possibly the most contentious of their requests is to ban senior government officials from profiting on personal crypto business ties — most pointedly, President Donald Trump.

There are procedural headwinds, too. Senate floor time is always at a premium, and other matters could still get in the way, such as the war in Iran and Trump's threats that he won't sign any approved bills until Congress sends him a voter-ID package he can sign into law before the midterm congressional elections.

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