The CLARITY Act advanced toward Senate Banking Committee markup Friday with a compromise on stablecoin yield restrictions, setting up a decisive legislative window before Memorial Day recess. The draft text bars crypto firms from paying interest on payment stablecoins but permits rewards if not “economically or functionally equivalent” to bank deposit interest. Senate Banking Committee Chairman Tim Scott’s office released the compromise as negotiations over developer protections and related provisions continue this week.
Banks Push Back on Yield Compromise Language
The stablecoin yield clause emerged as the central point of contention between banking and crypto stakeholders. Banks sought explicit restrictions on yield mechanisms they viewed as deposits by another name. The compromise language—prohibiting interest but allowing rewards under a vague equivalency test—left financial institutions concerned about regulatory workarounds. A Senate Banking staffer said Friday: “Time for everyone to move on from yield. Banks should not turn a modest win into a loss.” The ambiguity in “economically or functionally equivalent” suggests enforcement challenges ahead, particularly as DeFi protocols develop new reward structures.
Markup Timeline Narrows as Congress Returns
The Senate Banking Committee faces two possible markup windows: the week of May 11 when Congress returns from recess, or the week of May 18 before Memorial Day break. No official confirmation of exact dates has been announced. DeFi industry representatives signaled urgency, stating “the next two weeks are critical” for finalizing remaining provisions on developer protections and the Blockchain Regulatory Certainty Act (BRCA). The crypto market cap stood at $2.59 trillion on Monday, underscoring the stakes for the sector. Bipartisan support remains essential—one industry leader noted: “Without Democrats, the measure can’t move forward.”
Related Provisions Still Under Negotiation
The CLARITY Act markup depends on resolving multiple outstanding issues beyond stablecoin yield. Developer protections, ethics provisions, and the scope of BRCA language remain in active negotiation this week. The crypto industry has framed the stablecoin compromise as bank-favorable, while financial institutions view it as insufficient. This competing narrative suggests ongoing tension in bipartisan talks. How lawmakers reconcile these interests—and whether Democratic support holds—will determine whether the committee advances the bill or delays action further.
Next Steps: Markup Vote or Further Delay
The markup vote itself represents the first major hurdle. Committee passage does not guarantee Senate floor consideration, particularly if bipartisan consensus fractures. Industry sources expect finalized text on developer protections and BRCA this week, which could either accelerate markup or reveal new fault lines. If the committee does not vote by late May, the bill faces uncertainty heading into the summer legislative calendar.
