Senate deal on stablecoin yield clears path for Crypto Bill

Editor’s note, March 24: This article has been updated with the latest market reaction to the CLARITY Act deal.

Circle slides as CLARITY deal points away from balance yield
The agreement’s ban on yield paid directly on stablecoin balances, while allowing only activity-based rewards, was quickly reflected in the market. Circle shares fell about 15%, pointing to investor concern that the deal weakens a key growth path for USDC beyond its payments role.

Sens. Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) reached a bipartisan agreement in principle on stablecoin yield that would bar rewards on passive balances, allowing the Digital Asset Market Clarity Act to move to a Senate Banking Committee hearing.

The understanding, reached in Washington after months of talks, addresses concerns that yield on holdings of dollar-pegged stablecoins could resemble interest on bank deposits and prompt outflows from traditional lenders.

Alsobrooks on Friday: ‘Sen. Tillis and I do have an agreement in principle. We've come a long way.'

Connor Lounsbury, communications director for Alsobrooks, confirmed the accord and noted the senators will consult industry stakeholders for feedback. He pointed to remaining issues on ethics and illicit finance that must be resolved to secure a broad, bipartisan vote in the committee. Lounsbury described the approach as one that protects innovation while addressing deposit flight concerns raised by lawmakers in both parties.

According to people familiar with the talks, detailed legislative language is expected to begin circulating among crypto and banking groups early next week. The White House has been reviewing updated text; officials did not offer immediate comment Friday. Lawmakers have indicated the Banking Committee could hold a hearing in the latter half of April. Sen. Cynthia Lummis (R-Wyo.), who leads the panel's crypto subcommittee, has projected a late-April session and posted a ‘yield' sign image on X.

If the bill clears Banking, it would need to be reconciled with a related version that previously passed the Senate Agriculture Committee before heading to the floor. Advocates have cited May as an aspirational timeline, though Senate floor time remains limited by other priorities.

Bank representatives had warned that allowing stablecoin rewards on idle balances could weaken a core source of funding for lending by making deposits less sticky. By restricting yield on passive holdings, sponsors aim to reduce deposit-flight risk while leaving room for stablecoin use in payments and trading.

Several elements of the broader package remain under negotiation, including treatment of decentralized finance and ethics provisions for digital asset oversight. Tillis and Alsobrooks plan to continue talks with stakeholders as legislative text is refined. Industry participants were aware a compromise had been reached but had not yet seen the latest draft.