CLARITY Act Nears Senate Vote After Stablecoin Compromise

The compromise bans passive yield on stablecoins that functions as the “economic equivalent” of bank deposits. At the same time, it allows activity-based rewards tied to real platform usage. These include trading fees, payments, and staking.

Industry groups are now pushing for a Senate Banking Committee markup the week of May 11. According to Punchbowl News, Senator Tim Scott signaled the bill is “in the red zone.”

What the CLARITY Act Does

The Digital Asset Market Clarity Act creates a federal framework for crypto regulation in the United States. It assigns CFTC oversight for digital commodities like Bitcoin and Ethereum. Securities fall under SEC jurisdiction.

The bill also includes DeFi safe harbors and staking protections. It establishes a tokenization framework for real-world assets. Both provisions address longstanding gray areas that kept institutional capital on the sidelines.

The House passed the bill in July 2025 with strong bipartisan support at 294-134. Since September 2025, it sat in the Senate Banking Committee. One dispute held everything up: whether crypto firms can pay yield on stablecoins.

That single issue consumed eight months of negotiations. Banks feared deposit flight. Crypto firms argued yield products drive adoption. Neither side budged until the Tillis-Alsobrooks text landed.

The Stablecoin Yield Compromise Explained

Banks lobbied hard against stablecoin yield. They argued that paying interest on stablecoins competes directly with bank deposits. If customers move savings into higher-yielding stablecoins, banks lose cheap funding.

The compromise draws a clear line. Crypto firms cannot offer yield that is “the functional or economic equivalent to banks’ offerings.” Passive yield, similar to a savings account, is banned.

Activity-based rewards remain legal. These include trading fee rebates, payment processing rewards, and staking participation incentives. The distinction protects deposits while preserving crypto innovation.

Coinbase CEO Brian Armstrong called it “a durable compromise that protects innovation while addressing bank concerns.” Banking trade groups responded cautiously on May 4. They stated the language “falls short of a full prohibition.”

Market Reaction Signals Confidence

Markets responded quickly to the compromise. According to CoinDesk, Polymarket odds for “CLARITY Act passes in 2026” jumped from roughly 46% to 55-64%. That shift happened within 24 hours of the text release.

Coinbase ($COIN) and Circle stock both rose sharply between May 2 and May 4. Stablecoin-related tokens including MKR, ENA, and FXS posted gains during the same window.

Stablecoin TVL in yield-bearing products remains a key metric. Ethena’s USDe, MakerDAO’s sDAI, and Mountain Protocol all saw increased deposits as traders positioned for regulatory clarity.

Timeline to a CLARITY Act Senate Vote

The current timeline points to a Senate Banking Committee markup during the week of May 11. If that proceeds on schedule, a full CLARITY Act Senate vote could happen by late May. That would put it before the Memorial Day recess.

Multiple sources confirm this timeline. CoinDesk, Barron’s, and Reuters all reported the compromise as the breakthrough clearing the final hurdle. Punchbowl News cited committee sources expecting action within days.

Several unknowns remain. The exact markup date is not confirmed. Amendments could alter the final text. The Senate calendar is crowded, and some members want more time to review the compromise language.

Opposition Has Not Disappeared

The American Bankers Association issued a joint statement on May 4 with other banking groups. They said the proposed language “falls short” and warned Congress “must get this right.”

Their concern centers on defining “activity-based” rewards. If the line between passive yield and activity rewards proves blurry, banks worry crypto firms could offer deposit-like products under a different name.

For now, this opposition has not derailed the timeline. Amendments during markup could still tighten the language further. The final text may look different from the current compromise.

Stablecoin Yield: Crypto Companies vs Traditional Banks

What Comes Next for Crypto Regulation

The crypto industry is watching the week of May 11 closely. A successful markup moves the CLARITY Act Senate vote to the full chamber. If it passes, the bill goes to the President’s desk.

Signing would give the U.S. its first comprehensive crypto market structure law. That means regulatory clarity for exchanges, DeFi protocols, staking services, and tokenized assets. It could also unlock institutional capital that has waited for clear rules.

Community sentiment on social media is strongly bullish. Retail investors are celebrating the “3 weeks away” narrative. Analysts remain measured, focusing on the May 11 markup as the next real catalyst.

The bill’s passage would also set a global precedent. Other jurisdictions including the EU and UK have moved faster on crypto rules. A U.S. framework could reshape how global projects structure their operations and token distributions.

This is not financial advice. Legislative timelines can shift. The final text may differ from the current compromise.