A potentially significant development is unfolding in Washington, D.C., as reports indicate a tentative bipartisan agreement has been reached between the White House and key U.S. lawmakers regarding the contentious issue of yield on stablecoins. This deal, if finalized, could unstick the long-awaited Digital Asset Market Clarity Act of 2025, commonly known as the CLARITY Act, moving it toward a Senate vote.
According to a Friday report from Politico, Republican Senator Thom Tillis of North Carolina and Democratic Senator Angela Alsobrooks of Maryland—both members of the influential Senate Committee on Banking, Housing, and Urban Affairs—have forged an “agreement in principle.” Their negotiation appears focused on addressing a major sticking point that caused the bill to stall earlier this year: whether stablecoin issuers should be permitted to share yield generated from their reserves with token holders.
Senator Alsobrooks, speaking on the deal’s framework, emphasized its dual purpose. “I think what it will do is to allow us to protect innovation, but also gives us the opportunity to prevent widespread deposit flight,” she stated. The core of the compromise, as described, is a prohibition on offering yield on what she termed “passive balances,” a detail that requires further definition but suggests a regulatory line between interest-bearing and non-interest-bearing stablecoins.
The CLARITY Act. Source: US Congress
Specific legislative text of this prospective accord has not been made public. Senator Tillis noted that the cryptocurrency industry must review and vet the agreement before it is finalized. Cointelegraph sought comment from the White House on the details of the negotiation but did not receive a response by publication time.
Path to Passage and Industry Hurdles
The momentum for a deal was palpable at this week’s DC Blockchain Summit. Wyoming Senator Cynthia Lummis, a leading congressional voice for digital asset policy, told attendees, “We are so close” to enacting a comprehensive regulatory framework. A spokesperson for Lummis provided a more specific timeline to Cointelegraph, indicating that a final deal is expected to materialize within “the next few days.” The spokesperson added that Lummis is currently working to finalize ethics-related language within the broader bill.
Wyoming Senator Cynthia Lummis addresses the DC Blockchain Summit. Source: DC Blockchain Summit
The CLARITY Act’s journey has been anything but smooth. It was initially expected to pass with relative ease following the enactment of the GENIUS stablecoin framework. However, in January, the bill hit a major roadblock after significant industry players, most notably the cryptocurrency exchange Coinbase, raised concerns. A primary point of contention was the regulatory ambiguity surrounding whether stablecoin issuers could legally distribute the yield from their reserve assets (typically short-term U.S. Treasuries) to holders of the tokens—a practice common in decentralized finance (DeFi) but novel in the traditional financial context.
The Banking Industry’s Deposit Flight Concerns
Opposition to yield-bearing stablecoins has been vocal from the traditional banking sector. Banking industry groups argue that such products would lure consumer and business deposits away from banks. Since most checking and savings accounts offer annual percentage yields (APY) well below 1%, while some stablecoin yield products offer 5% APY or more, banks fear an erosion of their low-cost deposit base and a subsequent reduction in lending capacity and market share.
Patrick Witt, the executive director of the White House Council of Advisors for Digital Assets, directly challenged these fears during his remarks at the DC Blockchain Summit. He characterized the banking sector’s concerns as “overblown,” positing a different economic outcome. Witt argued that the legalization and regulation of dollar-pegged, yield-bearing stablecoins would actually attract a “wave of fresh capital” into the U.S. financial system, much of which would likely be deposited and leveraged by banks themselves, ultimately strengthening the domestic banking industry rather than weakening it.
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