CLARITY Act markup puts stablecoin rewards under scrutiny with 100+ amendments
The US Senate Banking Committee is set for CLARITY Act markup with 100+ proposed amendments, turning the long-delayed stablecoin bill into a key test of how far “stablecoin rewards” can go.
The biggest fight is over whether rewards can be paid on idle stablecoin holdings. The emerging compromise would block rewards that look like interest on bank deposits, but still allow incentives tied to active stablecoin use such as payments and transactions. Banks argue this still creates a loophole, warning crypto intermediaries could design “yield-like” incentives that compete with insured banks.
Reportedly, Senators Jack Reed and Tina Smith have filed an amendment aimed at rewards “substantially similar” to deposit interest, which could give regulators more room to restrict reward schemes. Advocacy messaging is also intense: Coinbase-backed “Stand With Crypto” says banking lobbyists sent 8,000 demand letters to stop stablecoin rewards, while crypto supporters sent 300,000 emails and made 8,000 calls.
Beyond stablecoin rewards, Democrats are expanding pressure. Sen. Elizabeth Warren has reportedly filed 40+ amendments, including language to limit Federal Reserve “master accounts” that would enable crypto firms to access Fed payment rails. Other amendments include Sen. Mark Warner’s changes to DeFi decentralization standards and Sen. Reed’s proposal to prevent crypto from being used as legal tender, including for tax payments.
For traders, the practical risk is regulatory uncertainty around stablecoin rewards language. Committee outcomes could quickly shift compliance expectations and sector risk appetite, especially for projects relying on incentive-based stablecoin models.
Bearish
The latest updates suggest the CLARITY Act could materially narrow or redefine “stablecoin rewards,” especially for idle holdings. That raises compliance and business-model risk for issuers and intermediaries that may rely on yield-like incentives. The “substantially similar” deposit-interest language, if adopted, could force rapid rewrites of reward programs and increase regulatory overhang.
At the same time, additional amendments (Fed master-account access limits, DeFi decentralization standard changes, and limits on crypto as legal tender) broaden uncertainty across the sector, which traders typically discount with lower risk appetite. Net effect: near-term headline risk is high, and the path to predictable rules looks less favorable, keeping price impact on crypto markets skewed bearish.