The latest draft of the Digital Asset Market Clarity Act (CLARITY Act) signals a major shift in the stablecoin battle—one that currently favors traditional banks. The proposed language would ban offering yield on stablecoin balances, whether directly or through indirect mechanisms. In simple terms, this means users would no longer be able to earn passive income on stablecoins, removing one of crypto’s most attractive features compared to bank deposits.
Markets reacted immediately. Circle, the issuer behind USDC, saw its valuation drop sharply—losing $5.6 billion in a single session. This reflects investor concern that stablecoin-based revenue models could be significantly weakened if the rule becomes law. Platforms like Coinbase, which rely on stablecoin rewards as part of their business, could also face direct financial impact.
The push behind this provision largely comes from the banking sector. Organizations like the American Bankers Association have strongly opposed stablecoin yield from the beginning, viewing it as a threat to traditional deposits. Analysts estimate that allowing yield-bearing stablecoins could shift up to $500 billion away from banks by 2028. This explains why banks have taken a firm and coordinated stance during negotiations, ultimately influencing the current draft language.
On the other side, the crypto industry has actively lobbied for more flexible rules. While companies and executives invested heavily in shaping the bill—and even gained some legislative traction—the outcome so far falls short of their goals. Notably, figures like Brian Armstrong have remained publicly silent on the latest draft, despite previously playing a decisive role in halting earlier discussions.
It’s important to note that nothing is final yet. The bill has not gone through full markup, and several key issues—including DeFi regulation and broader political trade-offs—are still unresolved. This means the language could still change before becoming law.