Senate Releases Clarity Act Draft Separating Stablecoins From Bank-Like Deposit Products

U.S. lawmakers are advancing a revised stablecoin framework that increasingly centers on how closely dollar-backed digital assets should resemble traditional bank deposits, as banking industry groups push for tighter restrictions on stablecoin rewards programs ahead of Senate committee discussions.

The discussions are taking place around the Senate Banking Committee’s updated 309-page Clarity Act draft, which would establish a broader federal market structure framework for the digital asset industry. Senate Banking Committee Chair Tim Scott described the revised text as a “good-faith” effort to provide regulatory clarity, consumer protections, and safeguards against illicit finance.

According to draft revisions discussed ahead of the Senate Banking Committee vote, the proposed legislation would prohibit issuers from offering interest or yield simply for holding stablecoins. However, the framework would still permit activity-based incentives tied to functions such as staking, liquidity provision, collateral usage, or transaction activity.

The revisions reflect growing efforts by lawmakers to distinguish stablecoins used for payments and settlement infrastructure from products that could compete directly with bank deposits.

The revised language follows earlier disagreements that reportedly led Coinbase to withdraw support for a previous version of the legislation ahead of a planned January committee markup. Negotiators later introduced compromise language backed by Sens. Angela Alsobrooks and Thom Tillis that prohibits issuers from offering interest-like rewards for simply holding stablecoins while preserving certain activity-based incentives tied to blockchain network participation.

Banking Sector Pushes for Tighter Restrictions

American Bankers Association reportedly made a late-stage lobbying push seeking stricter limitations on stablecoin reward structures before the committee vote.

Banking groups have argued that yield-bearing stablecoins could draw liquidity away from the traditional banking system by creating deposit-like products outside conventional banking regulation. The debate has intensified as stablecoins expand beyond crypto trading and move deeper into payments, treasury management, and cross-border settlement infrastructure.

At the same time, crypto firms and digital asset industry participants have pushed back against broader restrictions, arguing that certain incentive structures are necessary for blockchain-based financial networks and liquidity mechanisms.

Stablecoins Increasingly Positioned as Payment Infrastructure

The debate comes amid wider institutional adoption of stablecoin infrastructure across the payments sector.

Recent developments include Stripe expanding stablecoin-based business accounts and cross-border payment capabilities, while Visa continues broadening USDC settlement support for treasury and international payment operations.

Separately, S&P 500-listed Corpay recently partnered with BVNK to integrate stablecoin wallets and settlement infrastructure into its global payments network.

The growing use of stablecoins in enterprise settlement and liquidity management has increasingly shifted the policy discussion in Washington from whether stablecoins should exist to how deeply they should integrate with the broader financial system.

Political and Regulatory Obstacles Remain

Despite bipartisan movement around stablecoin legislation, significant obstacles remain before a broader market structure framework can advance.

Outstanding points of contention reportedly include anti-money laundering requirements, treatment of foreign issuers, consumer protections, and the role of stablecoin rewards programs.

The legislation also faces political friction over ethics provisions tied to digital asset holdings by federal officials. Several Democratic lawmakers have argued that the bill requires additional safeguards addressing potential conflicts of interest linked to President Donald Trump’s crypto-related ventures before broader bipartisan support can emerge.

Sen. Kirsten Gillibrand and Sen. Angela Alsobrooks have both indicated that ethics-related compromise discussions remain important to securing Democratic backing for the legislation. Meanwhile, Sen. Elizabeth Warren criticized the current framework for lacking provisions addressing potential conflicts tied to political figures and digital asset businesses.

The stablecoin rewards debate has emerged as one of the clearest fault lines between the banking sector and digital asset industry participants, particularly as lawmakers attempt to define whether stablecoins should function primarily as payment infrastructure or evolve into deposit-like financial products.

The outcome could carry broader implications for payment companies, stablecoin issuers, and financial institutions increasingly integrating blockchain-based settlement systems into mainstream financial operations.