Summary
The CLARITY Act would prohibit passive stablecoin yield (interest paid solely for holding a payment stablecoin, or anything equivalent to bank-deposit interest) while permitting activity-based rewards tied to payments, liquidity, collateral, governance and staking. The bill separates digital cash (settlement) from digital investments (yield), turning yield into a product-architecture problem.
Key Points
- Prohibition: covered companies cannot pay interest/yield solely for holding a payment stablecoin, or in a way economically/functionally equivalent to bank-deposit interest.
- Prohibition targets the account wrapped around the stablecoin, not the token itself.
- Permissible rewards: payments, transfers, conversions, remittances, settlement, merchant rebates, market-making liquidity, collateral, governance, validation, staking.
- Balance-based formulas not automatically prohibited if tied to qualifying activity/transaction.
- Stablecoins positioned to compete with payment rails, not bank deposits.
- Marketing restrictions: cannot market payment stablecoins as deposits, investments, or government-insured; cannot describe compensation as risk-free or comparable to deposit interest.
- Knowing/willful violations: Treasury civil penalties up to $5M per violation.
- SEC, CFTC, Treasury get 1 year post-enactment to jointly clarify boundary and publish non-exclusive permissible-programs list.
- Good-faith reliance on statutory exceptions gets limited opportunity to correct.
- Architecture consequence: unbundle products — payment money (no passive return) vs. swept lending/tokenized MMF vs. transactional incentives.
- Separates digital cash from digital investments; yield migrates to tokenized Treasuries, lending, regulated investment vehicles.
- "Equivalence" is the real fight — regulators must distinguish genuine activity from manufactured activity designed to preserve savings-like returns.