As lawmakers prepare for the CLARITY Act decision later this week, a newly revised draft of the U.S Senate’s CLARITY Act includes updates into how Washington intends to regulate stablecoin incentives.
The latest language maintains a firm prohibition on passive rewards earned solely from holding stablecoins, but allowing “activity-based rewards” tied to user participation.
Drawing a Line Between Rewards and Participation
At the heart of the debate is a long-running question: should stablecoin rewards be treated like bank interest?
Under the current CLARITY Act draft, the answer is largely no, at least when it comes to passive rewards. Digital asset service providers would be barred from offering rewards that accrue simply because a user holds a payment stablecoin in their account.
Lawmakers backing the restriction argue that such arrangements could blur the line between stablecoins and insured bank deposits. However, the revised text makes a distinction. Rewards linked to active use or participation are explicitly permitted, signaling that Congress is not seeking to eliminate incentives altogether, but rather to prevent stablecoins from functioning as unregulated savings vehicles.
What the Revised Draft Allows
The updated language exempts a broad range of activity-based incentives, including rewards associated with:
- Payments, transfers, remittances, and settlements
- Use of wallets, platforms, applications, or networks
- Liquidity provision, staking, or posting collateral
- Governance participation or validation activities
- Loyalty programs, promotional campaigns, subscriptions, and rebates tied to usage
Lawmakers Frame the Update as a Compromise
Senate Banking Committee Chair Tim Scott has described the revised language as the product of extensive bipartisan work, incorporating feedback from across the committee and outside stakeholders. Supporters say the framework offers long-needed clarity for both consumers and companies, ensuring payment stablecoins remain focused on utility rather than yield generation.
Industry and Banking Sector Reactions
Reaction across the crypto industry has been cautiously optimistic. Large platforms and exchanges have argued that activity-based rewards function more like cashback or loyalty incentives than traditional interest, and that banning them outright would put digital payment systems at a competitive disadvantage.
Traditional financial institutions, however, remain wary. Community banks and credit unions continue to warn that stablecoin reward structures, if too loosely defined, could pull deposits away from regulated institutions. They argue this could reduce lending capacity for small businesses, homeowners, and agricultural borrowers, particularly in local markets.
Looking Ahead to Thursday
As of January 13, 2026, the revised CLARITY Act draft sets the stage for what could be one of the most consequential stablecoin debates of the year. Thursday’s markup session will test whether the current compromise can hold or whether further amendments emerge under pressure from competing interests.
The outcome of the CLARITY Act will signal how much room there is for crypto platforms to continue innovating and how far traditional financial institutions are willing to adapt as digital assets become more integrated into the broader financial system.
Stay tuned for what happens next.
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