A critical battle is unfolding in the U.S. Senate over the future of stablecoin rewards, as banking groups make a last-minute push to ban them entirely. This move directly challenges a carefully negotiated compromise, putting the entire legislative effort at risk.
The core of the issue lies in a deal struck by Senators Thom Tillis and Angela Alsobrooks. Their proposal was designed to be a middle ground: it would allow crypto platforms to offer 'activity-based incentives', such as rewards for making transactions, but would ban 'passive yield' that mimics a traditional bank savings account. This was seen as a key step toward passing the Digital Asset Market CLARITY Act.
However, banking associations argue this compromise creates a dangerous loophole. They fear that even activity-based rewards could entice customers to move trillions of dollars from bank deposits into stablecoins. Their concern is rooted in economics; with Treasury bills yielding around 3.6% and average bank savings accounts offering less than 0.6%, the potential returns from stablecoin rewards are very attractive to consumers. The banks' new proposal aims to close this perceived loophole by banning all forms of customer rewards on stablecoins.
This fight didn't start overnight. Its origins trace back to the 'GENIUS Act', signed into law in July 2025. That law banned stablecoin issuers from paying interest but left a gray area about whether other companies, like exchanges or wallet providers, could offer similar rewards. The CLARITY Act was meant to resolve this ambiguity. Past attempts to move the bill forward have stalled over this exact issue, highlighting just how contentious it is.
Now, with a committee vote (known as a "markup") scheduled for May 14, the stakes are incredibly high. The banks' push could either force a much stricter bill to pass or delay the entire process once again. For crypto companies like Coinbase, which reported $305 million in stablecoin revenue in the first quarter, the outcome will have a direct impact on their business models. This clash is more than a technical debate—it's a power struggle over the future of money and who gets to manage it.
- Stablecoin: A type of cryptocurrency designed to have a stable value by pegging it to an external asset, such as the U.S. dollar.
- Markup: A meeting held by a legislative committee to debate, amend, and rewrite a proposed bill before voting on whether to send it to the full chamber for a vote.
- Yield: The income return on an investment, such as the interest or dividends received from holding a particular security. In this context, it refers to interest-like rewards on crypto assets.