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]. | Event | Date | Significance | | | | | | House passes CLARITY Act (294 134) | July 17, 2025 | Bipartisan approval; sent to Senate | | Senate Banking Committee postpones markup | January 14, 2026 | 100+ amendments filed; Coinbase pulls support | | White House sets compromise deadline | March 1, 2026 | Deadline expires without resolution | | ABA formally rejects White House compromise | March 5, 2026 | Polymarket odds fall to ~55% | | Alsobrooks speaks at ABA Summit | March 10, 2026 | Confirms bipartisan compromise effort | | Senate Banking Committee targets markup | Late March 2026 | Forthcoming | 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]. | Compensation Type | Status Under Proposal | Rationale | | | | | | Idle balance yield (holding rewards) | Prohibited | Functionally equivalent to a savings deposit | | P2P payment rewards | Permitted | Tied to transactional activity | | Remittance and settlement rewards | Permitted | Incentivizes payment system usage | | Loyalty program rewards | Permitted | Analogous to credit card rewards | | Liquidity provision rewards | Permitted | Supports market infrastructure | 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 ar…