CLARITY Act Hits Snag as Lawmakers Clash Over Banning Stablecoin "Rewards"

A growing fight over whether stablecoin issuers and crypto platforms should be allowed to pay passive "rewards" is holding up the U.S. Senate's market structure package, the CLARITY Act, as lawmakers race to finish crypto rules ahead of an upcoming congressional deadline. The dispute sharpened in late March 2026, pitting banking groups against crypto firms. Banks are urging lawmakers to prohibit stablecoin yields that look like deposit interest, arguing that high payouts could siphon money away from traditional accounts. Crypto companies counter that restricting yield-bearing stablecoins would slow adoption and reduce market liquidity. The CLARITY Act, backed by the president and designed to establish a comprehensive U.S. crypto framework with clearer classifications for digital assets, has stalled after negotiations broke down over the yield question. Banking advocates point to the large rate gap: traditional savings accounts generally pay about 0.01% to 0.50% annually, while some crypto platforms offer roughly 3.5% to 4% on stablecoin deposits such as USDC. Banks warn the difference could accelerate deposit outflows from the banking system. At the center is whether dollar-pegged stablecoins should function primarily as payment and settlement tools, or whether they should be allowed to compete directly with bank accounts and money market funds by offering yield. A ban on passive rewards could also hit retail participation. Many users hold stablecoins to earn returns while waiting to trade; removing yield may weaken on-chain dollar demand and reduce liquidity across crypto venues. Exchanges could take a revenue hit as well. Coinbase, Kraken, and Gemini benefit from large stablecoin balances through interest-sharing arrangements and treasury strategies. If stablecoin deposits fall, platform revenue and overall activity could come under pressure. Even so, the industry may find workarounds. Crypto firms have previously reshaped reward programs under tighter rules, shifting from direct interest to activity-based incentives tied to trading, payments, or liquidity participation. Some yield programs could also migrate outside the United States if regulatory pressure rises, allowing global platforms to keep incentives in jurisdictions with different standards. Many market participants argue that regulatory clarity remains the bigger prize. By defining digital commodities and securities and potentially reducing enforcement risk, the CLARITY Act could support longer-term growth and innovation even if passive stablecoin rewards face new limits.