A US senator may unveil a “draft compromise” aimed at resolving the dispute over stablecoin revenues in the upcoming CLARITY Act.
Another update on encryption legislation
Republican US Senator Thom Tillis (RN.C.) claimed on Monday that he aims to unveil a draft deal this week to break the deadlock over stablecoin yields between banks and cryptocurrency companies. According to PoliticoHe collaborated with Sen. Angela Alsobrooks (D-Md.) on new CLARITY Act language designed to finally iron out whether cryptocurrency companies can pay interest on dormant stablecoin holdings.
According to the report, the text has already been shared with both banking groups and cryptocurrency companies. The report says banks are still opposed to basic elements, and Telles has left room for changes.
The already long-running dispute over the yield is the main hurdle keeping the landmark CLARITY Act stuck in the Senate, even after the House passed its version last year. Although the GENIUS Act passed last year prohibits stablecoin issuers from paying interest directly to holders, it still allows third-party platforms like exchanges to offer the yield.
At the beginning of the monthPaul Greenwall, chief legal officer at Coinbase, noted that Senate negotiators were “very close” to reaching an agreement on the most contentious cryptocurrency issue in the CLARITY Act: stablecoin yields.
Dispute over stablecoin returns
Let’s remember that the controversy lies in the fact that yield stablecoins compete directly with traditional bank deposits because they offer dollar-denominated assets that can move instantly across the chain while still paying attractive returns, making them a compelling alternative to savings and money market accounts.
Banks fear this will drain the deposits that fund their lending and investment activities, especially from younger, more digitally savvy customers who are comfortable holding value in tokenized form. As a result, they are pushing for strict restrictions or outright bans on interest-like payments to stablecoin holders, arguing that such products should be regulated like banking and that unregulated yields could undermine financial stability and their underlying funding base.
However, on the crypto side, the return on parked stablecoin balances is seen as a key advantage: it is one of the main ways exchanges and DeFi platforms attract and retain users by turning idle cash into a revenue-generating product. These returns help differentiate on-chain dollars from traditional bank accounts, support token incentive programs, and deepen liquidity across lending markets, perpetuals, and automated market makers.
For many platforms, cutting or severely limiting stablecoin yields would hurt their core business model, weaken DeFi integration, and make it difficult to compete for global capital that can move to more permissive territories with just a few clicks.
What does this mean for the market?
More recently, the emerging policy line seems to be moving in the direction of no “passive” return for passive balances, but rather towards potential rewards tied to payments, transfers, and other “active uses.” Tillis’ draft settlement aims to codify it, clarifying what would be considered a prohibited benefit versus permissible activity-based rewards.
How the US sets stablecoin yields will shape the dollar’s competition with foreign central bank digital currencies (CBDCs) and offshore stablecoin venues that still offer a yield. US exchanges may have to focus on activity-based “rewards,” and offshore platforms could attract capital seeking returns.
Any final text will significantly impact the stablecoin’s APY, liquidity, and where serious traders store their dry powder.
At the moment of writing, BTC trades for more than $74k on the daily chart. Source: BTCUSDT on Tradingview.
Cover image by Perplexity. BTCUSDT chart from Tradingview.
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