The Senate has reached a deal on how the long-delayed CLARITY Act would treat stablecoins, putting the legislation back on track. Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) agreed to a compromise addressing one of the main sticking points: whether crypto firms can reward users for holding stablecoins by paying interest.
Banks have argued that allowing interest-bearing stablecoins could draw deposits out of the traditional banking system. The compromise attempts to address that concern by distinguishing between passive yield and activity-based rewards. Incentives tied to user activity could still be allowed, while rewards that resemble traditional deposit interest would be restricted.
“I would characterize it as more favorable to banks and larger crypto-native firms like Circle, as they already have substantial value in their stablecoin ecosystems,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research. “I have been skeptical of the deposit-flight concern, or that consumers might replace checking accounts with stablecoins.”
Merchant-Driven Rewards
A more immediate and practical issue is the potential migration of “payment-adjacent” balances into stablecoin-enabled applications—particularly if those platforms prove faster, cheaper, and easier to use. They may also incorporate discounts or rewards at the point of use.
“I could imagine bill payment or merchant acceptance of stablecoins that offers a discount, allowing merchants to lower their acceptance costs,” Wester said. “It would just be offered alongside existing payment acceptance options they already route through the same processor.”
Merchants, in turn, could gain more flexibility to offer features such as lower-cost acceptance, faster settlement, and tailored customer incentives. Depending on how the market evolves, a broader prepaid or loyalty ecosystem could emerge around stablecoins.
The Opportunity Remains
For banks, the compromise language further reduces the likelihood that consumers will shift savings into idle stablecoin holdings. Instead, stablecoins may be positioned less as standalone yield products and more as components within a wider payments landscape.
“The practical impact is fairly straightforward. The markup narrows the stablecoin yield story, but it does not narrow the opportunity for providers of stablecoins,” said Wester. “If anything, it reinforces the need to frame stablecoins within an existing payment and settlement infrastructure.”
