The US Senate has finalized the language of the CLARITY Act, a key piece of legislation aimed at regulating stablecoins and other digital assets. The bill's Section 404 bans bank-like yield on stablecoins, effectively ending the era of high-yield savings accounts in the crypto space.
The move is intended to prevent 'deposit flight,' where users migrate their funds from traditional banks to crypto exchanges in search of higher yields. This would potentially tighten credit and raise loan costs for everyday Americans. The ban will impact crypto exchanges that offered high-yield savings accounts, but platforms can still reward payments, transfers, trading, and staking.
The regulatory change comes after months of debate and negotiation between lawmakers and industry stakeholders. The compromise language preserves activity-based rewards for real on-chain usage, which means users can still earn rewards for using their stablecoins in legitimate ways.