Senior Counsel at Consensys Shares Perspective on Stablecoin Yields and US Crypto Regulation

The U.S. Senate's proposed CLARITY Act has become a focal point for the crypto industry and regulators. The bill seeks to clarify regulatory frameworks for digital assets, including restrictions on stablecoin yield. This debate has led to significant pushback from crypto firms and growing concerns about regulatory overreach.

Coinbase CEO Brian Armstrong has publicly distanced his company from the CLARITY Act, citing provisions that could cripple its stablecoin-related revenue. Coinbase's withdrawal of support has triggered a broader debate about the future of stablecoin yields and competition between traditional and crypto finance.

Industry leaders and lawmakers remain divided. The White House has remained silent but is reportedly considering dropping the bill if Coinbase and other firms do not return to negotiations.

Why Did This Happen?

The core issue in the CLARITY Act is the restriction on passive interest from stablecoins. The Senate draft would prohibit stablecoin issuers from offering rewards for simply holding the assets. Instead, rewards would be limited to activities like staking, trading, or liquidity provision.

Banks and financial institutions argue these rules are necessary to protect traditional banking systems. They claim stablecoin yields could divert deposits from banks and weaken the financial sector. Coinbase and others counter that such restrictions are anti-competitive and favor legacy institutions over innovation.

How Did Markets React?

Crypto markets have responded with uncertainty. Coinbase and other firms that rely on stablecoin revenue face potential revenue cuts. Analysts at S&P Global forecast that Coinbase could generate over $1 billion in stablecoin-related income in 2025, largely from its partnership with Circle.

The U.S. Senate Banking Committee delayed its markup of the bill following Coinbase's withdrawal. This delay has added pressure on lawmakers to reach a compromise that satisfies both crypto firms and banking groups.

What Are Analysts Watching Next?

Industry experts are closely monitoring negotiations between Coinbase, banks, and the White House. Some analysts believe a revised version of the bill could emerge if key players find common ground. Others warn that failure to resolve the stablecoin yield issue could lead to a legislative stalemate.

Anthony Scaramucci, founder of SkyBridge Capital, has warned that the ban on stablecoin yield could weaken the U.S. dollar's global standing. He argues that foreign competitors are already offering interest on digital currencies.

Regulatory clarity remains a top priority for the crypto industry. The outcome of the CLARITY Act could determine the long-term competitiveness of U.S. digital assets. If the bill passes in its current form, it could significantly reshape the stablecoin landscape and limit innovation in yield-based products.

The debate is far from over. As lawmakers and industry players continue negotiations, the final shape of the CLARITY Act will likely reflect compromises between regulatory oversight, market competition, and consumer protection.