US Senate Banking Committee Sets May 14 Markup for CLARITY Act After Stablecoin Interest Compromise

The U.S. Senate Banking Committee has scheduled a markup session for the CLARITY Act, a key piece of stablecoin legislation, for 2:30 p.m. UTC on May 14. The move follows a compromise brokered by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) that resolves a longstanding dispute between the crypto and banking sectors over interest payments on stablecoins.

Breaking the Stalemate on Stablecoin Interest

The CLARITY Act had been stalled for weeks as industry groups clashed over whether stablecoin holders should earn interest. Crypto exchanges argued that activity-based rewards—such as those tied to trading volume or platform usage—are essential for their business models. Banks, meanwhile, warned that allowing interest based on deposit balances could trigger significant deposit outflows from traditional institutions, destabilizing the banking system.

The compromise preserves activity-based rewards, which exchanges rely on, while explicitly prohibiting interest calculated solely on the deposit balance of stablecoin holdings. This middle ground appears to have satisfied enough stakeholders to allow the bill to advance, though the banking industry has signaled that further amendments will be needed before it can offer full support.

What the Markup Means for the Legislation

The scheduling of the markup indicates that Committee Chairman Sherrod Brown (D-OH) and Ranking Member Tim Scott (R-SC) are determined to move the bill forward despite remaining disagreements. Markup sessions allow committee members to debate, amend, and ultimately vote on whether to send the bill to the full Senate floor.

Following the markup, the CLARITY Act is expected to be merged with a complementary stablecoin bill from the Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission (CFTC). This combined legislation would then proceed to a full floor vote in the Senate, marking a significant step toward establishing a federal regulatory framework for stablecoins.

Ethics Provisions Gain Attention

Separately, some lawmakers are advocating for the inclusion of an ethics provision that would prohibit high-ranking public officials from personally profiting from the crypto industry. This push reflects growing bipartisan concern about conflicts of interest in digital asset policymaking, though it remains unclear whether such a measure will be added during the markup or at a later stage.

Why This Matters to the Crypto Industry and Consumers

The CLARITY Act is one of the most consequential pieces of crypto legislation currently before Congress. If enacted, it would establish clear federal rules for stablecoin issuers, including reserve requirements, disclosure standards, and consumer protections. For the broader crypto market, regulatory clarity around stablecoins could reduce uncertainty, encourage institutional participation, and potentially pave the way for wider adoption of dollar-pegged digital assets in payments and decentralized finance.

For consumers, the bill’s provisions on interest and rewards directly affect how platforms can incentivize stablecoin use. The preservation of activity-based rewards means users may continue to earn benefits tied to trading or platform engagement, while the restriction on deposit-based interest aims to protect the traditional banking system from sudden capital shifts.

Conclusion

The Senate Banking Committee’s decision to schedule a markup for the CLARITY Act represents a concrete step forward in the long-running effort to regulate stablecoins at the federal level. While the banking industry has called for further changes and an ethics provision remains under discussion, the bipartisan compromise on interest payments has removed a key obstacle. The coming weeks will be critical as the bill moves through the markup process and toward potential merger with Agriculture Committee legislation ahead of a full Senate vote.

FAQs

Q1: What is the CLARITY Act?
The CLARITY Act is a proposed U.S. federal law that would establish a regulatory framework for stablecoin issuers, including requirements for reserves, transparency, and consumer protections.

Q2: What was the main disagreement that stalled the bill?
The crypto and banking sectors disagreed over whether stablecoin holders should earn interest. Crypto exchanges wanted to offer activity-based rewards, while banks feared deposit-based interest would cause customers to move money out of traditional accounts.

Q3: What happens after the Senate Banking Committee markup?
After the markup, the CLARITY Act is expected to be merged with a stablecoin bill from the Senate Agriculture Committee. The combined legislation would then go to the full Senate for a floor vote.