U.S. Crypto Legislation “Clarity Act” Latest Amendments Revealed, Core Red Line: Stablecoins Cannot Earn Interest Like Bank Deposits Just by Holding Them, Only Permitted Through User Behavior-Based Reward Programs Behind this boundary is a battle by traditional banking industry to protect its deposit market.
(Background: SEC Chair Atkins comments on “Crypto Explanation Order”: This is just the beginning, the key is a 99% aligned stablecoin bill)
(Additional context: Easing of US-Iran tensions? Trump says “Negotiations are effective,” Bitcoin rebounds strongly past $71,000)
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- Core Red Line: Want to earn interest just by holding? Not allowed
- Shadow of Banking Industry Pressure
- Potential Impact on DeFi
- Legislative Progress: The Second Step of a Two-Phase Strategy
- Unresolved Issues
The second piece of the puzzle in U.S. crypto legislation has caused many DeFi practitioners to break out in a cold sweat. According to information obtained by CoinDesk, industry insiders saw the latest revised draft of the “Digital Asset Market Clarity Act” (Clarity Act) for the first time during a closed-door meeting on Capitol Hill this Monday.
Core Red Line: Want to earn interest just by holding? Not allowed
The latest draft clearly draws a line regarding stablecoin yields:
Prohibition of “Balance-Based Earnings”: Users cannot simply earn interest by holding stablecoins; any design resembling bank deposit interest rates is banned.
Allowing “Behavior-Based Rewards”: If users earn rewards through specific actions (like using protocols, completing transactions, etc.), these are not restricted.
This distinction seems clear, but the exact boundary of “activity” is not precisely defined in the legislation, leaving room for interpretation and setting the stage for future regulatory battles.
Shadow of Banking Industry Pressure
This regulation is not unfounded. Long-standing pressure from traditional banking players has pushed Congress to ensure that stablecoin reward mechanisms do not “look like deposit interest.” The logic is straightforward: banks’ core business model involves taking deposits and making loans for interest; if stablecoins can offer similar or higher yields, depositors might withdraw funds from banks, directly impacting their lending capacity.
This amendment, jointly promoted by Democratic Senator Angela Alsobrooks and Republican Senator Thom Tillis, represents a compromise between the banking sector and crypto industry: you can have reward mechanisms, but they cannot resemble deposit accounts.
Potential Impact on DeFi
The issue is that many protocols in the DeFi space fundamentally operate on the principle: “Deposit, and I give you interest.” Lending protocols like Aave and Compound, which lend out stablecoins, are classic examples of balance-based earnings: users deposit USDC into the protocol, which automatically calculates accrued interest without further action.
If the Clarity Act is ultimately passed under the current framework, these protocols will need to redesign their yield distribution mechanisms or face compliance challenges in the U.S. market. If regulators interpret "behavior-based rewards strictly, even some forms of liquidity mining could be affected.
Legislative Progress: The Second Step of a Two-Phase Strategy
Last year’s “GENIUS Stablecoin Act” became the first federal legislation on stablecoins in the U.S., establishing a basic regulatory framework. The Clarity Act is the second phase, aiming to address broader digital asset market regulation, with plans to reduce regulatory uncertainty and open the door for institutional investors.
Regarding legislative progress, similar versions have passed the House, and another has been reviewed by the Senate Agriculture Committee. Approval by the Banking Committee will be a key milestone. The closed-door meeting was convened to reach consensus on key provisions before public hearings.
Unresolved Issues
Stablecoin yield regulation is just one of many contentious points in the Clarity Act. Sources indicate that Democrats remain concerned about the illegal financial protection mechanisms in DeFi regulation, fearing that the anonymity of decentralized protocols could be exploited for money laundering; additionally, provisions banning senior government officials from profiting from crypto ventures are politically sensitive at this time.
These unresolved issues mean that even if the Senate Banking Committee’s review proceeds smoothly, the Clarity Act still has a long road ahead before becoming law.
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