Draft of CLARITY Act Seeks to Restrict Stablecoin Returns

Draft legislation aimed at bringing greater clarity to digital asset markets is prompting debate across the crypto and banking sectors, as new provisions seek to curb yield-generating stablecoin products.

The latest version of the Digital Asset Market Clarity Act, known as the CLARITY Act, would prevent platforms from offering returns on stablecoin holdings in ways that resemble traditional bank deposits.

The measure would apply to a wide range of digital asset service providers, including exchanges, brokers, and their affiliates, and is intended to close loopholes by banning rewards considered “economically or functionally equivalent”  to interest.

Crypto industry representatives reviewed the updated text on 23 March, while trade bodies met with members of the US Senate Banking Committee. Bank representatives are also expected to examine the draft and hold discussions with lawmakers, underlining the broader impact of the proposals.

Under the bill, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the US Treasury would work together to define which types of rewards are permitted. They would also be required to introduce anti-evasion rules within a year, shaping how firms can design incentives linked to stablecoins.

Non-yield-bearing stablecoins such as USDC and USDT are unlikely to be heavily affected. However, decentralised finance protocols and exchanges offering passive income products could face greater scrutiny, reflecting the bill’s focus on returns rather than everyday stablecoin use.

Reaction has been mixed. Some in the industry argue the rules could limit earning opportunities for users, while others see them as a workable compromise. Online, the proposals have also fuelled wider concerns about financial inequality and whether traditional banks will continue to hold the upper hand.