Key Takeaways
- Senators are working on compromise language on stablecoin rewards in an effort to restart the CLARITY Act.
- The Senate Banking Committee’s draft already separates passive yield on held stablecoins from activity-based rewards tied to payments, transfers and platform use.
- If lawmakers agree on revised language, the bill could return to the Senate Banking Committee for a markup after weeks of delay.
A fight over stablecoin rewards could decide whether the Senate’s crypto market structure bill starts moving again.
Sen. Angela Alsobrooks said Tuesday that she is working with Sen. Thom Tillis on a compromise aimed at closing what banks see as a loophole in the rules around stablecoin rewards.
Her remarks, delivered at the American Bankers Association’s Washington summit, point to a fresh attempt to restart momentum behind the CLARITY Act after negotiations slowed over how crypto platforms may reward users.
Why This Fight Matters
The dispute centers on a narrow but politically loaded question: when does a stablecoin reward begin to look too much like bank interest?
Talks over the CLARITY Act stalled after banks objected to a White House-backed compromise that would allow rewards in limited cases.
The proposal would permit rewards for certain activities, such as peer-to-peer payments, while barring rewards on idle holdings.
That distinction already appears in the Senate Banking Committee’s draft text.
Section 404 says a digital asset service provider may not pay interest or yield “solely in connection with the holding of a payment stablecoin.”
The same section allows “activity-based” rewards linked to transactions, payments, transfers, remittances, settlement activity, use of a wallet or platform, loyalty programs, liquidity, collateral and some forms of ecosystem participation.
What Alsobrooks Said
The most direct public signal came from Alsobrooks herself.
According to the ABA Banking Journal, Alsobrooks said she is working with Tillis on a compromise to address a loophole that could allow crypto firms to bypass the GENIUS Act’s prohibition on paying interest on stablecoins.
She did not lay out the text, but said all sides would probably have to accept a result that does not give them everything they want.
That matters because Alsobrooks and Tillis sit on the Senate Banking Committee, which controls the text that will go to markup.
Their effort suggests the current push is not a full rewrite of the bill. It is an attempt to land narrower language that can get the legislation moving again.
What the Senate Draft Already Allows
The current draft is more detailed than the public debate often makes it sound.
It bans passive yield tied to simply holding a payment stablecoin.
It also bars firms from marketing compensation in ways that suggest the token is a bank deposit, that the reward is risk-free or that it is comparable to interest on a deposit account.
The draft further requires disclosures stating that a payment stablecoin is neither a deposit nor an insured product.
The bill also orders the Federal Reserve, the OCC and the FDIC to study deposit outflows related to stablecoin compensation within two years of enactment.
That requirement shows how central the deposit question has become in the negotiations.
Why the Banking Side Is Still Pressing
Banks want the guardrails tighter.
In comments on the draft, the Conference of State Bank Supervisors argued that the rewards language should be strengthened to stop indirect workarounds through affiliates or third parties.
The OCC’s proposed rule implementing the GENIUS Act also reflects that concern.
It asks whether the prohibition on interest and yield should be broader, how “interest,” “yield” and “solely” should be clarified, and what kinds of rewards should fall within the ban.
It also lays out a presumption against arrangements in which affiliates or related third parties pay holders in connection with keeping stablecoins.
That means the argument is no longer only about whether stablecoin issuers can pay yield directly.
It is also about whether exchanges, platforms or affiliated entities can design rewards programs that achieve something close to the same economic result.
What Happens Next
If the Senate Banking Committee settles the reward language, the next step would be a markup hearing that has already been delayed once.
The Banking Committee draft would then still need to be reconciled with the Agriculture Committee’s version before the full Senate could vote.
The bill also faces unresolved fights over anti-money laundering rules and ethics provisions.
That leaves the CLARITY Act with a clear immediate hurdle and a messier road beyond it.
For now, though, the stablecoin rewards issue remains the hinge.
If senators can agree on where consumer incentives end and deposit-like yield begins, the bill may regain momentum.
If they cannot, one of Washington’s biggest crypto legislation efforts could stay stuck where it is.
PhD, researcher and writer exploring AI, blockchain, and the philosophy of tech, with a focus on DeScAI, governance, and trust.
