Stablecoin Reward Ban Debate Reignites as CLARITY Act Stalls

The discussion surrounding the regulation of stablecoin rewards has reached a critical point as the CLARITY Act, a bill aimed at creating comprehensive rules for the US crypto market, remains stalled in the Senate.

Negotiations over the bill have broken down due to disagreements on whether stablecoin providers should offer yield. Banking groups are lobbying lawmakers to prohibit stablecoin rewards that resemble deposit interest, citing concerns that the gap between traditional savings accounts and yield-bearing stablecoins could trigger deposit outflows from the financial system.

Crypto firms, however, argue that banning passive rewards would reduce retail participation and lower liquidity across crypto platforms. Many users place their funds in stablecoins to earn passive returns while waiting for trading opportunities. A reduction in stablecoin deposits could affect platform revenue and overall activity.