Senators Alsobrooks and Tillis Push Stablecoin Yield Compromise to Revive Stalled CLARITY Act

Senator Angela Alsobrooks (D-Md.) walked into the American Bankers Association Washington Summit on March 10, 2026, and delivered a message the room of roughly 1,400 community bankers was not entirely prepared to hear: the stablecoin yield fight that has paralyzed the Digital Asset Market Clarity Act (H.R. 3633) for months will require both sides to accept less than what they want. Speaking alongside her Republican counterpart Senator Thom Tillis (R-N.C.), Alsobrooks confirmed the pair is drafting compromise language on the bill's most contentious provision, Section 404, which governs whether crypto platforms can pay rewards to stablecoin holders [1][2][3].

The Dispute That Stalled a Landmark Bill

The CLARITY Act passed the House on July 17, 2025, by a bipartisan vote of 294 to 134, establishing a framework that classifies digital assets into three regulatory buckets: securities under the SEC, digital commodities under the CFTC, and stablecoins under shared oversight. But the bill has been frozen in the Senate since January, when more than 100 amendments were filed and Senate Banking Committee Chairman Tim Scott postponed a scheduled markup rather than risk a failed vote [3][4].

The central fight is over stablecoin yield. The GENIUS Act, enacted in 2025, banned stablecoin issuers from paying interest to holders. Banks argue, however, that the law created a loophole: crypto exchanges like Coinbase can still offer yield-like rewards to customers holding stablecoins, effectively functioning as unregulated savings products. Section 404 of the Senate Banking Committee's draft attempts to close that gap by prohibiting payments made "solely in connection with the holding of a payment stablecoin" while permitting activity-based rewards tied to transactions, remittances, loyalty programs, liquidity provision, and platform usage [1][3][5].

The Stakes: Trillions in Potential Deposit Flight

The banking industry's resistance is grounded in concrete modeling. Executives from JPMorgan and Bank of America have cited Treasury Department projections estimating that banks could lose up to $6.6 trillion in deposits if stablecoin yield programs went mainstream, a figure that reflects the scale of disruption banks believe is possible if crypto platforms operate as de facto savings vehicles without equivalent regulatory burden. Standard Chartered has published a separate, more conservative estimate projecting roughly $500 billion in deposits could migrate from U.S. banks to stablecoins by the end of 2028 [3][4].

For crypto firms, the numbers cut the other way. Stablecoin-related revenue accounted for close to 20% of Coinbase's total revenue in the third quarter of 2025. Brian Armstrong, Coinbase's CEO, publicly accused the banking lobby of championing "a provision designed to protect bank profits rather than consumers" and pulled the company's support for the CLARITY Act in January 2026 [3].

"We absolutely have to have these protections to prevent the deposit flight, but we're going to probably have to make some compromises." [2]

That statement from Alsobrooks at the ABA Summit captured the essence of the bipartisan position: acknowledge the banks' deposit-flight concerns as legitimate while insisting the bill cannot become a vehicle for eliminating stablecoin competition entirely.

The Compromise Framework

The Alsobrooks-Tillis framework draws a line between two types of stablecoin compensation. Passive, idle-balance yield, where a holder earns a return simply for holding stablecoins, would be prohibited. Activity-based rewards tied to specific behaviors such as peer-to-peer payments, remittances, settlement activity, loyalty programs, and liquidity provision would be permitted [1][2][3].

The draft also includes a marketing restriction barring firms from suggesting that a stablecoin is a bank deposit, that rewards are risk-free, or that compensation is comparable to interest on a deposit account. Required disclosures must state that a payment stablecoin is neither a deposit nor an insured product. The bill further orders the Federal Reserve, OCC, and FDIC to study deposit outflows related to stablecoin compensation within two years of enactment [5].

This framework mirrors the compromise brokered by the White House earlier this year, which crypto firms accepted but the ABA formally rejected on March 5, 2026. Cody Carbone, CEO of the Digital Chamber, a crypto industry trade group, said Tillis "has been very receptive to discussions about stablecoin yield" and expressed optimism the industry can "get to yes on the bill" [2]. Summer Mersinger, CEO of the Blockchain Association, noted that "the White House weighing in on the negotiations and pushing banks to engage in good faith adds important momentum as talks continue" [2].

A Narrow Legislative Window

The calendar is working against everyone. With midterm elections in November 2026, lawmakers are expected to begin dispersing from meaningful legislating by May or June. If the Senate Banking Committee does not hold its markup by April, the bill likely dies in this Congress, introducing 12 to 18 months of additional regulatory uncertainty [2][4].

"It is also really important to a good number of our states, who have said, unequivocally, 'we want to protect our banking system; we want to protect our community banks.' What we don't want to happen is to have the status quo." [1]

Alsobrooks' remarks underscored the risk of inaction. The EU's MiCA framework has already legalized stablecoin yield products that would be restricted under current U.S. proposals, raising concerns about capital migration offshore. Ripple CEO Brad Garlinghouse estimated an 80 to 90% probability of passage by late April, though Polymarket odds have since retreated to roughly 55% following the ABA's rejection of the White House compromise [3][4].

The path from here remains narrow. The Senate Banking Committee must finalize its rewards language and schedule the late-March markup before reconciling with the Senate Agriculture Committee's CFTC provisions. Alsobrooks summed up the effort: "Don't let perfect be the enemy of good" [1][2].

References

[1] ABA Banking Journal, "Sen. Alsobrooks Floats Possible Compromise on Closing Stablecoin Loophole," March 10, 2026. https://bankingjournal.aba.com/2026/03/sen-alsobrooks-floats-possible-compromise-on-closing-stablecoin-loophole/

[2] Rare Evo, "Senators CLARITY Act Stablecoin Yield Compromise 2026," March 11, 2026. https://rareevo.io/news/senators-clarity-act-stablecoin-yield-compromise-2026

[3] Yahoo Finance/CCN, "CLARITY Act Could Pass Without..." March 11, 2026. https://finance.yahoo.com/news/clarity-act-could-pass-without-094512781.html

[4] Reuters/Investing.com, "Analysis: Crypto Bill Hits New Impasse," March 5, 2026. https://www.investing.com/news/politics-news/analysiscrypto-bill-hits-new-impasse-raising-doubts-over-its-future-4542815

[5] FinTech Weekly, "What Is the CLARITY Act: Digital Asset Market Structure Explained 2026," March 12, 2026. https://www.fintechweekly.com/news/what-is-the-clarity-act-digital-asset-market-structure-explained-2026