The US CLARITY Act, a legislative proposal that seeks to establish a regulatory framework for the crypto industry in the United States, has taken a major step toward becoming law. This comes after the surprise finalization of the new stablecoin yield provisions in the crypto market structure bill.
Crypto Firms Not To Pay Bank-Like Interests On Stablecoin
On Friday, May 1st, US Congress Journalist Brendan Petersen posted on the X platform that US Senators Thom Tillis and Angela Alsobrooks have finalized a compromise on the stablecoin yield provision in the CLARITY Act. This subject has been a reason for dispute between the crypto and banking industries (who believe that stablecoin yields could hurt the banking system’s competitiveness) over the past few months.
As stipulated in the final text titled “SEC 404. Prohibiting interest and yield on payment stablecoins”, the CLARITY Act states that crypto firms are not allowed to pay “any form of interest or yield” to customers for solely holding their payment stablecoins in a similar fashion to banks paying interest on deposits. However, the law would allow companies to pay rewards or incentives (that are not functionally or economically equivalent to interests on bank deposits) based on “bona fide activities or transactions.”
Other permissible digital asset activities that could receive an incentive under this new rule include participation in governance, validation, staking, or a loyalty program — as long as they are not “functionally or economically equivalent to the payment of interest or yield on an interest-bearing bank deposit.”
It’s Time To Get The CLARITY Done: Coinbase Executive
As expected, this finalized stablecoin yield provision has drawn significant commentary from the crypto community since it became public. While several participants believe this development suggests that the passage of the CLARITY Act is only a matter of time, some industry executives expressed concerns about the compromise.
For instance, Coinbase’s Chief Policy Officer, Faryar Shirzad, explained in a social media post that much of the banking-versus-crypto debate was based on “imagined risks” and unsubstantiated concerns.
Shirzad wrote on X:
In the end, the banks were able to get more restrictions on rewards, but we protected what matters – the ability for Americans to earn rewards, based on real usage of crypto platforms and networks. We also ensured the US can be at the forefront of the financial system – which in this competitive geopolitical era is paramount.
Nevertheless, the crypto executive said it is time to pass the CLARITY Act, reiterating that the focus should now return to the broader bill.
