On May 1, 2026, Punchbowl News reported it had obtained the compromise bill text hammered out by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) on the stablecoin yield question at the center of the Digital Asset Market Clarity Act, known as the CLARITY Act. CoinDesk subsequently published the verbatim legislative language.

The text resolves the last major negotiating dispute blocking a Senate Banking Committee markup. It draws a clear line between prohibited yield and permitted rewards: a distinction that will shape how stablecoin products are structured in the United States for years.

What the Text Actually Says

The core prohibition reads:

“No covered party shall, directly or indirectly, pay any form of interest on yield (whether in cash, tokens, or other consideration) to a restricted recipient — (A) solely in connection with the holding of such restricted recipient’s payment stablecoins; or (B) on a payment stablecoin balance in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”

The prohibition does not apply to incentives “based on bona fide activities or bona fide transactions” that are distinct from yield generated by interest-bearing deposits. The text explicitly preserves activity-based rewards tied to real platform use (i.e. transactions, participation, network activity).

The compromise draws a line between two models: a savings account model (hold stablecoins, earn interest) and a credit card rewards model (use the platform, earn something back for that use). The former is prohibited. The latter is permitted.

What Gets Banned

Passive yield on stablecoin holdings is out. Any product where a user deposits stablecoins and receives a return simply for holding them – regardless of whether that return is called “yield,” “interest,” “rewards,” or anything else – is prohibited if it functions economically like bank deposit interest.

The anti-evasion language in the text closes the labeling loophole. Renaming a yield product as “rewards” does not exempt it if the economic substance is functionally equivalent to deposit interest. Regulators will have authority to assess substance over form.

Loyalty programs are specifically addressed and not automatically exempt. The text indicates loyalty-style programs are subject to the same prohibition if they functionally replicate deposit yield.

What Stays Permitted

Activity-based rewards remain allowed. The test is whether the reward is tied to genuine platform use (i.e. transactions, participation in network activities, or other defined behaviors) rather than the mere act of holding a stablecoin balance.

Coinbase’s chief legal officer, Paul Grewal, said the language “preserves activity-based rewards tied to real participation on crypto platforms and networks.” Coinbase had been central to the negotiations and had the most at stake from restrictions on stablecoin rewards programs.

One industry participant quoted in CoinDesk’s reporting described the practical shift as moving from “buy and hold” to “buy and use” as the qualifying structure for rewards. What exactly counts as sufficient activity to qualify will not be fully resolved by the legislation itself.

The Rulemaking Provision

The most consequential open question sits in the rulemaking section. The text directs the Treasury Department and the Commodity Futures Trading Commission to propose new stablecoin regulations within one year of the bill becoming law. That rulemaking will define what activities qualify for permitted rewards, what factors regulators consider (the text references balance, duration, tenure, and type of activity), and how to distinguish permitted programs from prohibited yield.

The latitude that provision gives regulators is significant. The legislative text sets the outer boundary. The rulemaking fills in the details that actually govern day-to-day product design. Depending on how Treasury and the CFTC interpret their mandate, the permitted space for activity-based rewards could be narrow or relatively broad.

What Comes Next

The yield compromise removes the primary obstacle to a Senate Banking Committee markup vote on the CLARITY Act. Senate Banking Committee Chairman Tim Scott had previously postponed a markup scheduled for January after the yield language remained unresolved. That markup is now expected to move forward, though no date has been publicly confirmed.

Other negotiating points in the broader CLARITY Act legislation have not been fully resolved publicly. The yield section was the most visible sticking point, but the overall bill still needs to clear the committee, pass the full Senate, reconcile with any House version, and be signed into law before the rulemaking process can begin.

The timeline from bill signing to effective stablecoin yield rules is therefore at minimum 12 to 18 months from passage, and likely longer given the rulemaking process.

What It Means for Stablecoin Operators

Any stablecoin product currently offering passive yield to US users will need to restructure or exit the US market. The passive yield model (i.e. hold stablecoins, receive a return on that balance) does not survive this legislation as written.

Products built on the activity-based rewards model have a path forward, but the details of that path depend on the Treasury and CFTC rulemaking. Operating in the permitted space will require careful product design, legal review, and ongoing compliance monitoring as regulatory guidance develops.

Non-US stablecoin products serving non-US users are not directly subject to this legislation. The CLARITY Act governs US persons and US-facing products. Offshore structures serving exclusively non-US users operate outside this framework, though they should monitor how US regulatory standards influence global norms over time.

The Sora Ventures Perspective

The yield compromise in the CLARITY Act follows the same structural logic as the GENIUS Act’s prohibition on payment stablecoin issuers paying yield to holders. Taken together, US legislation is converging on a clear principle: stablecoins function as payment instruments, not investment products. Yield belongs to the banking system. Activity-based rewards are a distinct category that can coexist with that principle.

For Sora Ventures’ portfolio companies and partners building in the digital asset space, the legislative direction is now clear enough to design around. Products intended to serve US markets need to be structured around activity-based incentives, not passive yield. Products serving Asian markets under local regulatory frameworks face different constraints, but US legislative standards tend to influence how other jurisdictions calibrate their own frameworks over time.

The rulemaking period is the phase to watch closely. The Treasury and CFTC definition of what constitutes qualifying activity will determine how much room exists between the prohibited zone and the permitted one.

 

---

Sources: Punchbowl News (first obtained the compromise text, May 1, 2026, punchbowl.news); CoinDesk (published verbatim bill language, May 1, 2026, coindesk.com). The underlying document is proposed CLARITY Act bill text released by Senators Tillis and Alsobrooks.