On May 4, 2026, Circle's stock jumped nearly 20% and Bitcoin broke $80,000. The catalyst was a Senate compromise on a single provision inside the Digital Asset Market Clarity Act: whether stablecoin platforms can continue offering yield to consumers. The compromise answer is yes, with conditions. Understanding those conditions is the key to knowing what your stablecoin rewards will look like in 2027 and beyond.
The Digital Asset Market Clarity Act is the most comprehensive US crypto legislation since the GENIUS Act. Where the GENIUS Act focused narrowly on stablecoin issuers, the CLARITY Act covers the entire digital asset ecosystem: which assets are securities versus commodities, how crypto exchanges must operate, reporting and compliance rules, and yes, how stablecoin rewards can be structured.
The bill passed the House of Representatives in July 2025 with strong bipartisan support, 294 votes to 134. It has been the subject of intensive Senate negotiations ever since, with the stablecoin yield question proving to be the most contentious sticking point between the crypto industry and traditional banks.
Banks argued that allowing stablecoin platforms to pay deposit-equivalent interest would drain deposits from the traditional banking system. If Coinbase can offer 4% on USDC and a bank offers 0.5% on a savings account, consumers might shift money out of banks and into stablecoins. Banks argued this would destabilize the financial system and give crypto firms an unfair competitive advantage.
The crypto industry countered that stablecoin rewards are fundamentally different from bank deposit interest. Banks lend out depositors' money and earn a spread. Stablecoin issuers hold 100% reserves in US Treasuries under the GENIUS Act, and platforms earn yield from those reserves. The risk profile is different, and the consumer protection case for banning stablecoin rewards is weak.
Months of negotiations, including White House-facilitated sessions between bank lobbyists and crypto executives, produced the compromise text released on May 1, 2026 by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD).
The compromise text bans any "covered party" from paying "any form of interest or yield" to a stablecoin holder "solely in connection with the holding of such restricted recipient's payment stablecoins" or "in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit."
In plain English: you cannot pay someone simply for holding stablecoins, and you cannot structure a reward program that works like a savings account.
The critical exception: this restriction does not apply to incentives "based on bona fide activities or bona fide transactions" that are different from bank deposit yield. Rewards tied to spending, trading, staking, or other platform activity are explicitly preserved. The text is similar to how credit card rewards work: you earn cashback for spending, not for holding a balance.
Patrick Witt, executive director of the President's Council of Advisors for Digital Assets, described the outcome at Consensus Miami on May 6, 2026: "Crypto is unhappy, banks are unhappy, but they're both about equally unhappy. And so we know that we got the right compromise." He declared the stablecoin yield issue "closed."
Coinbase CEO Brian Armstrong posted simply: "Mark it up." Coinbase's chief legal officer Paul Grewal said the language "preserves activity-based rewards tied to real participation on crypto platforms and networks."
| Product | Type | Likely outcome under CLARITY |
|---|---|---|
| Coinbase USDC rewards (4.1% APY) | Passive holding yield | Needs restructuring to activity-based model |
| Nexo earn accounts (up to 10%) | Passive holding yield (EU platform) | EU-regulated, less directly affected |
| KAST card cashback (1.5-3%) | Spending-based reward | Explicitly preserved under compromise |
| Bybit card cashback | Spending-based reward | Explicitly preserved under compromise |
| Trading fee rebates | Activity-based reward | Explicitly preserved under compromise |
| Staking rewards | Activity-based reward | Likely preserved, subject to rulemaking |
| Referral bonuses | Activity-based reward | Likely preserved, subject to rulemaking |
The key shift the compromise requires is from a "buy and hold" model to a "buy and use" model. One crypto industry insider told CoinDesk that platforms will need to restructure how they offer yield, moving from passive holding rewards toward activity-based incentives. The exact mechanics will be defined by Treasury and CFTC rulemaking within one year of the bill becoming law, meaning the full picture will not be clear until 2027 at the earliest.
| Feature | GENIUS Act | CLARITY Act |
|---|---|---|
| Scope | Stablecoin issuers only | All digital assets |
| Status | Signed into law (July 2025) | Pending Senate passage |
| Yield ban applies to | Issuers only | Issuers + platforms (deposit-equivalent) |
| Activity-based rewards | Not addressed (OCC rulemaking pending) | Explicitly preserved |
| Key regulator | OCC, FDIC, Treasury | CFTC, Treasury, SEC |
| Timeline | Rulemaking due July 2026 | Passage target: July-August 2026 |
The stablecoin yield compromise is the biggest piece of the puzzle, but the CLARITY Act still has several unresolved issues before it can pass the Senate. These include DeFi provisions (how decentralized finance protocols are regulated), ethics and conflict-of-interest rules (a politically charged issue given President Trump's crypto holdings), the treatment of noncustodial software developers under the Blockchain Regulatory Certainty Act, and securing all Republican votes on the Senate Banking Committee.
The White House is targeting July 4, 2026 for final passage, with a Senate Banking Committee markup in May and four working Senate weeks in June for floor passage. Senator Kirsten Gillibrand predicted the first week of August 2026. Galaxy Research puts the odds of 2026 passage at roughly 50-50. Senator Cynthia Lummis has warned that failure this year could delay market structure legislation until 2030 or beyond.
The next key milestone is the Senate Banking Committee markup, expected in May 2026. If that happens on schedule, the CLARITY Act has a realistic path to becoming law before the end of 2026. If the markup slips past mid-May, the probability of 2026 passage drops sharply.
For consumers, the practical impact will not arrive immediately even if the bill passes. Treasury and the CFTC have one year to define what counts as a "bona fide activity" for rewards purposes. Platforms will then have their own transition periods to restructure products. The earliest you would see material changes to stablecoin rewards programs is late 2027.
StablePerks will update this article and all platform pages as the CLARITY Act progresses. The most important thing to understand right now is that the direction of travel is toward activity-based rewards, not the elimination of rewards. Cashback cards, trading rebates, and spending-linked incentives are the future of stablecoin perks. Passive holding yield, as it currently exists, is likely to be restructured.
The Digital Asset Market Clarity Act is a broad US crypto regulation bill covering all digital assets. Its main purpose is to resolve the jurisdictional dispute between the SEC and CFTC over crypto assets, and to establish clear rules for crypto exchanges, reporting, and compliance. It passed the House in July 2025 with bipartisan support (294-134) and is expected to pass the Senate in mid-2026.
Partially. The May 2026 Senate compromise bans stablecoin yield that is 'economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.' Passive holding rewards that resemble bank deposit interest are banned. However, 'bona fide activities or bona fide transactions' based rewards are explicitly allowed. Activity-based rewards tied to spending, trading, or platform participation are expected to survive.
The GENIUS Act (signed July 2025) covers only stablecoin issuers and bans them from paying yield directly to holders. The CLARITY Act covers all digital assets and addresses broader market structure questions including SEC vs CFTC jurisdiction, exchange regulation, and stablecoin yield at the platform level. The CLARITY Act is still pending Senate passage as of May 2026.
The White House is targeting July 4, 2026 for passage. The Senate Banking Committee markup is expected in May 2026, with four working Senate weeks in June for floor passage. Senator Gillibrand predicted the first week of August 2026. Galaxy Research puts the odds of 2026 passage at roughly 50-50.