Senate CLARITY Act Draft Permits Activity-Based Stablecoin Rewards

The U.S. Senate Banking Committee has released a revised draft of the CLARITY Act, known as the Digital Asset Market Clarity Act, which allows activity-based rewards for stablecoin users while prohibiting interest solely for holding stablecoins. The bill aims to address regulatory uncertainty around digital assets and establish clear rules for market participants.

The revised proposal permits incentives tied to specific user actions, such as payments, wallet activity, staking, and liquidity provision. It explicitly states that offering these rewards does not automatically classify a stablecoin as a security or a bank-like product. This clarification is intended to foster innovation while addressing concerns from banking groups.

The updated draft reflects months of negotiations between lawmakers, crypto firms, and financial institutions. A key concern for lawmakers has been the potential impact of stablecoin rewards on traditional banking. The legislation aims to strike a balance by limiting passive yield while preserving opportunities for active participation.

Why Did This Happen?

The debate over stablecoin rewards intensified after the passage of the GENIUS Act in 2025, which prohibited stablecoin issuers from offering direct interest to tokenholders. However, the law allowed third-party platforms like Coinbase to provide rewards, leading to tensions between the crypto industry and traditional banks.

The revised CLARITY Act draft emerged after weeks of bipartisan negotiations, with lawmakers seeking to finalize a compromise. The new language permits activity-based incentives but bars passive yield on idle stablecoin holdings. This approach is intended to prevent stablecoin platforms from competing directly with banks on interest-bearing deposits.

What Do Key Stakeholders Want?

Coinbase and other crypto exchanges have expressed support for the revised language. They argue that activity-based rewards align with existing financial practices and promote user engagement with digital assets. Coinbase has warned that overly restrictive language could force it to withdraw support for the bill.

Banking groups, including the American Bankers Association, continue to push for stricter limits on stablecoin rewards. They argue that such incentives could divert billions in deposits from community banks, weakening their ability to fund small businesses and local lending initiatives.

What Are Analysts Watching Next?

Analysts are closely monitoring how the final version of the CLARITY Act will be received in both the crypto and banking sectors. The bill is scheduled for a markup session in the Senate Banking Committee on January 15, 2026, after which it will move to the full Senate for consideration. According to reports, the outcome of the bill could influence the broader regulatory landscape for digital assets.

The outcome of the bill could influence the broader regulatory landscape for digital assets. If the legislation passes in its current form, it may provide much-needed clarity for crypto firms while addressing concerns from traditional financial institutions. However, delays or last-minute amendments could affect the timeline and final provisions.

The CLARITY Act is also expected to address other key issues, including token classification, investor protections, and anti-money laundering measures. Lawmakers are under pressure to finalize the bill before the 2026 midterm elections to ensure bipartisan support.

Market participants will be watching to see if the final version of the bill strikes a balance between innovation and financial stability. The outcome will have significant implications for crypto platforms, stablecoin users, and the broader financial ecosystem.