The Digital Asset Market Clarity Act, known as the CLARITY Act, advances in the U.S. Senate amid concerns over stablecoin rewards. Section 404 of the bill bans passive yields on payment stablecoins but allows activity-based incentives. This could reshape how platforms like Coinbase offer returns to users while integrating crypto into the traditional financial system.
The Digital Asset Market Clarity Act (CLARITY Act) is navigating a critical phase in the U.S. Senate, following its overwhelming passage in the House of Representatives. The bill aims to clarify regulatory oversight of digital assets, assigning securities to the Securities and Exchange Commission (SEC) and commodities to the Commodity Futures Trading Commission (CFTC). It requires crypto platforms such as Coinbase and Kraken to register with federal regulators and adhere to strict rules, while stablecoin issuers like Circle and Tether must follow banking-like standards.
A key sticking point is Section 404, which prohibits platforms from offering interest or yield solely for holding payment stablecoins, viewing such rewards as competition to bank deposits. Instead, it permits activity-based rewards tied to transactions, liquidity provision, loyalty programs, or ecosystem participation. This shift could eliminate simple holding yields, like those in Coinbase's USDC Rewards, but preserve incentives for active use, such as cashback on spending or staking.
The Senate Banking Committee postponed a markup after industry pushback, including from Coinbase, which raised alarms over decentralized finance provisions, SEC jurisdiction, and stablecoin yields. The Senate Agriculture Committee released a parallel draft on January 21, 2026, with a hearing set for January 27. To become law, the bill needs approval from both committees, a unified Senate version requiring at least seven Democratic votes alongside Republicans, House concurrence, and President Donald Trump's signature.
If passed, the legislation promises safer crypto holdings with government-backed dispute resolution, though it increases tracking and compliance. Platforms may begin aligning with rules preemptively, similar to the GENIUS Act signed in July 2025, where proposed stablecoin regulations are still under review. For everyday users, this could boost investment and token values through mainstream integration, but rewards face uncertainty pending negotiations.
