CLARITY Act compromise bans passive stablecoin yield to protect bank deposits

Stablecoins will be prohibited from offering passive yield—interest paid to a user simply for holding a token in a wallet without associated economic activity—under a draft compromise of the CLARITY Act. The structural ban prevents stablecoins from acting as direct high-yield competitors to traditional bank deposits, addressing banking sector warnings of catastrophic deposit flight from traditional savings accounts.

Senator Thom Tillis and Senator Angela Alsobrooks co-authored the CLARITY Act to establish the first comprehensive federal framework for stablecoins in U.S. history. The draft compromise aims to resolve a multi-month deadlock between traditional banking giants and the digital asset industry.

While passive yield is banned, the legislation includes a carve-out for activity-based incentives. These rewards are tied to payments, transfers, or participation in platform-governance tasks. This distinction allows the crypto industry to maintain functionality in the Social Finance and Agentic Commerce sectors.