CLARITY Act Gains Momentum as Tim Scott Eyes May Markup
Armstrong had helped stall the bill in January. He pulled support before a scheduled markup because of concerns over stablecoins and other parts of the draft. However, Scott then postponed the markup. Stablecoin yield has become one of the central disputes in the legislation. Last year‘s GENIUS Act barred stablecoin issuers from paying interest or yield on customers’ digital dollars. Regulators to Clarify Stablecoin Yield Rules Banks supported that restriction because they feared deposit flight. Customers could move funds from checking and savings accounts into stablecoins that often offer higher returns. However, Januarys compromise banned companies from paying passive yield on stablecoins. Yet it allowed rewards or incentives tied to transactions, payments, transfers, remittances, and liquidity provision in DeFi protocols. Copies of the latest draft circulating online suggest that much of that language remains. The CLARITY Act would ban interest or yield that is “economically or functionally equivalent” to interest or yield on a bank deposit. At the same time, the draft would allow “rewards or incentives” linked to “bona fide” activities or transactions. That wording leaves room for interpretation. U.S. financial regulators would have one year to publish rules under the bill. Despite the unclear language, industry groups welcomed the agreement. Blockchain Association CEO Summer Mersinger