Hi all, Aleks here. 

Hi everyone, Aleks here.

Christmas came early for the US crypto industry on Friday evening, when Punchbowl News reported that Senators had struck a deal limiting the payment of interest or yield on stablecoins.

Reactions ran the gamut.

Crypto investor Nic Carter said, simply, “The banks won.” Attorney Scott Johnsson, general counsel at Van Buren Capital, was more optimistic.

“This is fine,” he wrote on X. “It may not feel like it, but it is.”

But there was only one that really mattered.

“Mark it up,” Coinbase CEO Brian Armstrong wrote, seemingly signalling his support for a markup — a committee vote that could advance the bill.

The odds the Clarity Act passes in 2026 quickly jumped from 46% to 64% on Polymarket.

Recall that Armstrong single-handedly put the bill on ice back in January, when he pulled his support on the eve of a scheduled markup.

Armstrong said he was unhappy with the bill’s treatment of stablecoins, among other things. Senate Banking Committee Chair Tim Scott postponed the markup, and negotiators went back to the table.

Notably, other crypto executives appeared unhappy with the decision.

Last year’s stablecoin legislation, the GENIUS Act, banned stablecoin issuers from paying yield or interest on customers’ digital dollars. The ban was motivated by banks’ fear that customers would abandon traditional checking and savings accounts for stablecoins, which often pay substantially higher interest rates.

But it was unclear whether the law banned third-party crypto companies, such as exchanges, from paying interest, and banks have lobbied lawmakers to close the supposed loophole via the Clarity Act.

January’s compromise banned companies from paying passive yield on stablecoins — but it allowed them to offer rewards or incentives on activities such as transactions, payments, transfers, remittances, and providing liquidity in DeFi protocols.

According to copies of the latest draft circulating online, not much has changed since.

The Clarity Act would ban interest or yield “that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit,” the text reads. “Rewards or incentives” on “bona fide” activities or transactions, however, are allowed.

That, of course, is rather vague. The bill would give US financial regulators one year to publish rules clarifying when, exactly, companies can reward stablecoin users.

Still, the industry celebrates the detente.

“Resolving the stablecoin yield question clears the path to a Senate Banking Committee markup and brings us meaningfully closer to comprehensive market structure legislation becoming law,” Blockchain Association CEO Summer Mersinger said in a statement. “This agreement is a step in the right direction and we urge the Committee to move forward without delay.”

That could happen as soon as this month. But the clock’s ticking. The Senate’s draft will have to be reconciled with a version the House passed nearly one year ago, and legislative work is expected to grind to a halt as election season ramps up.

Scott sounded a positive note on Monday morning.

“We are making real progress on digital asset market legislation and restoring confidence in our economy,” he wrote on X. “@BankingGOP is nearing consensus, and is working toward a bipartisan markup in May to advance digital asset market structure.”

ICYMI

• Senators advance Warsh nomination after DOJ drops Fed chair probe
  
US Senators voted on party lines Wednesday to advance the nomination of Kevin Warsh, President Donald Trump’s pick to lead the Federal Reserve. The vote in the Senate Banking Committee puts Warsh on a glide path to confirmation.

• Democrat Senators question Howard Lutnick over Tether ties
  A pair of US Senators are demanding answers from Commerce Secretary Howard Lutnick after a recent news report raised questions about his relationship with Tether, the world’s largest stablecoin issuer.

• US Senate bans prediction market trading by Senators, staff
  The US Senate voted unanimously to ban prediction market trading among Senators and their staffers, joining several other organisations that have made similar moves in recent weeks.

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