The CLARITY Act, the most advanced crypto market-structure bill in Congress, is making progress towards becoming law. The bill aims to draw a clear line between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), assigning 'digital commodities' to the CFTC and leaving 'digital securities' under SEC oversight.
The draft text of the bill carves out DeFi developers and self-hosted smart contracts from being treated as deposit-taking institutions, focusing prudential rules instead on centralized intermediaries and stablecoin issuers. This protection for non-custodial protocols comes at the expense of yield-bearing stablecoin products, which would be barred from paying passive yield on stablecoin balances.
Issuers would be prohibited from paying interest, dividends, or yield on stablecoins held by users, effectively sacrificing 'risk-free yield' wrappers that had turned stablecoins into bank-account substitutes. However, rewards tied to specific on-chain actions like lending or liquidity provision remain permissible.