CLARITY Act Heads Toward Vote After Key Compromise
The U.S. Senate has taken an important step toward passing the CLARITY Act after senators Thom Tillis and Angela Alsobrooks introduced a compromise on May 4 that resolves the dispute over stablecoin yield - the main reason the bill had been blocked for months.
Summary
- A compromise on stablecoins moved the CLARITY Act forward.
- Activity-based rewards remain allowed.
- Coinbase confirmed a compromise between banks and crypto.
- The bill is close to a final vote.
- Probability of passing by the end of 2026: over 60%.
Blocked Progress
The CLARITY Act was not blocked because of Bitcoin or Ethereum, nor over the question of which regulator would oversee the markets.
The real issue was stablecoin yield – specifically, whether an asset that generates returns simply by being held should be treated as a bank deposit under U.S. law.
Banks argued the answer is “yes,” because such a structure could lead to funds leaving the banking system. If users can earn yield on dollar-denominated tokens via crypto platforms, deposit bases shrink—and those deposits underpin lending.
Crypto companies argued the opposite: restricting yield would make stablecoins less useful and put U.S. platforms at a disadvantage compared to international competitors.
The compromise lands squarely between these positions and, most importantly, draws a clear line.
What Is Allowed and What Is Prohibited
The new solution clearly distinguishes between passive and active yield – and this distinction unlocked progress on the bill.
According to Yahoo Finance, passive yield – where a balance generates returns simply by being held, similar to interest on a savings account – is prohibited. This means that holding a stablecoin alone will not generate income.
At the same time, activity-based rewards remain allowed. Users who provide liquidity, participate in lending, staking, or other activities in the crypto ecosystem will still be able to earn rewards.
This distinction preserves the core use cases of stablecoins in DeFi and trading, without turning them into a direct alternative to bank deposits.
Coinbase officially supported the compromise after initially opposing the bill. The company’s Chief Policy Officer, Faryar Shirzad, described the outcome as a balanced solution – banks gain protection, while crypto platforms retain tools to attract and retain users.
Where the Bill Stands Now
The Chairman of the Senate Banking Committee, Tim Scott, stated that the bill is now in the “red zone” – a term describing a stage where execution remains, not negotiation.
The committee is expected to hold a vote in May, which, if successful, would pave the way for a floor vote as early as June or July.
Markets are already reflecting this shift. On the platform Polymarket, the probability of the bill passing by the end of 2026 is estimated at 64% – the highest level in months and a sign of growing confidence, though far from certainty.
What the Law Will Change
The CLARITY Act introduces a clearer framework for the U.S. crypto market, focusing on three main areas.
First, the Commodity Futures Trading Commission (CFTC) will receive exclusive jurisdiction over spot markets for digital assets such as Bitcoin and Ethereum, reducing regulatory uncertainty and supporting the development of crypto products.
READ MORE: UK Regulator Clears Path for Tokenized Funds in Push to Modernize Asset Management
Second, developers of decentralized protocols receive specific protections – if they create software but do not control it, they will not automatically be treated as regulated market participants.
Third, federal consumer protection standards are introduced, including clear segregation of client funds and custody requirements, addressing issues exposed by the collapse of FTX.
Remaining Risks
The compromise removes the Senate deadlock but leaves one key ambiguity: how regulators will define “activity” that qualifies for rewards. A stricter interpretation could significantly limit this mechanism after the law is passed.
In addition, the legislative process still has several stages ahead – committee approval, Senate vote, reconciliation with the House of Representatives, and presidential signature – each carrying its own risks.
A 64% probability still means failure remains a real possibility.
On the other hand, the bipartisan nature of the compromise changes the dynamics. Tillis is a Republican, Alsobrooks a Democrat, and support from Coinbase adds industry weight – making failure less likely at this stage.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Zdravkov
Reporter at CoinsPress
Alexander Zdravkov is a market analyst and crypto journalist with interests in economics, broader financial markets and digital assets. His journey into crypto began more than four years ago, driven by a fascination with the rapid evolution of blockchain technology and the transformative potential of decentralized finance. He began analyzing market cycles and identifying emerging trends before they reach the mainstream. He holds a degree in International Relations - a background that helped shape his broader perspective on global economics, geopolitics, and the interconnected nature of modern financial markets. Whether covering the latest developments in the crypto sector or exploring broader macroeconomic themes, Alexander focuses on giving readers context rather than simply repeating headlines. During his career, he has authored more than 10,000 articles covering cryptocurrencies, traditional finance, and global market developments. His work spans everything from Bitcoin and altcoins to macroeconomic trends influencing risk assets worldwide.
