Senators Tell Banks “We Agree to Disagree” as CLARITY Act Moves Forward

TLDR

• Senators Thom Tillis and Angela Alsobrooks declared the Section 404 stablecoin yield compromise final on May 5, 2026
• The deal bans stablecoin rewards that function like bank deposit interest, but allows activity-based rewards
• Banking groups say the language still falls short, but senators say negotiations are closed
• A Senate Banking Committee markup is targeted for mid-May, with a full Senate vote possible in June or July
• Polymarket odds for the CLARITY Act becoming law in 2026 have risen to 70%

Senators Thom Tillis and Angela Alsobrooks released a joint statement on May 5, 2026, declaring their bipartisan compromise on Section 404 of the Digital Asset Market Clarity Act finalized.

The compromise addresses one of the most contested parts of the bill. It bans stablecoin rewards that are “economically or functionally equivalent” to interest paid on bank deposits.

At the same time, it preserves the right for crypto companies to offer activity-based rewards. These include rewards tied to trading, staking, or other on-platform participation.

Banking groups had raised concerns about deposit flight. The worry was that customers might move savings into stablecoin programs offering bank-style returns.

The American Bankers Association and other groups criticized the compromise. They argued the final language still falls short of protecting bank deposits.

The senators acknowledged the banking industry had a seat at the table throughout the process. They said feedback was heard and adjustments were made, but the core deal would not change.

Senate Timeline and Next Steps

Senator Tim Scott, Chairman of the Senate Banking Committee, said on Monday that “real progress” was being made on digital asset market legislation. He pointed to a markup scheduled for mid-May.

Senator Cynthia Lummis described the stablecoin yield compromise as finalized and said the CLARITY Act’s passage is near.

Coinbase Chief Legal Officer Paul Grewal congratulated senators for building bipartisan support. Coinbase CEO Brian Armstrong called for an immediate markup of the crypto bill.

If the Senate Banking Committee holds its markup in mid or late May, a full Senate vote could follow in June or July.

President Trump has previously confirmed he would sign the CLARITY Act immediately if it passed.

Market Reaction

Polymarket odds for the CLARITY Act being signed into law in 2026 climbed to 70% following the announcement. That is the highest level in over a month.

Circle stock surged 20% after senators confirmed the stablecoin yield compromise was final.

The broader Digital Asset Market Clarity Act also clarifies the division of regulatory authority between the SEC and the CFTC over digital assets.

That regulatory clarity has been a key factor holding institutional investment back. Defined rules determine where developers can build and which regulator oversees their products.

The Senate Banking Committee markup, targeted for mid-May, is now one of the most closely watched regulatory events in crypto for 2026.

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