US Senate agrees on compromise to ban stablecoin 'interest'… momentum builds on the CLARITY Act

US senators have reached a principle agreement on a compromise over stablecoin interest—one of the key sticking points in the digital-asset market structure bill known as the CLARITY Act now under discussion. With a major obstacle to passage removed, the legislative effort is expected to pick up pace.

According to Politico and other outlets on the 20th (local time), Republican Sen. Thom Tillis and Democratic Sen. Angela Alsobrooks reached an agreement on the stablecoin compensation structure in the CLARITY Act.

The core of the deal is to restrict the payment of interest simply for holding stablecoins. Alsobrooks said that “compensation on idle balances will be prohibited,” signaling that interest payments for passive holdings are unlikely to be allowed.

However, the specific legislative language has not yet been released. Even industry participants have not confirmed the details. A related draft is expected to be shared with stakeholders as early as next week.

Banks have long warned that paying interest on stablecoins could function similarly to deposit interest and trigger outflows. Against that backdrop, both sides have sought a compromise that would avoid threatening the banking system while not stifling industry innovation.

Alsobrooks emphasized that “this agreement matters because it finds a balance between protecting innovation and preventing large-scale deposit outflows.”

The bill still leaves additional contentious issues, including rules for decentralized finance (DeFi) and requirements to block illicit funds. Democrats, in particular, are pushing for tighter regulation centered on DeFi.

The Senate Banking Committee is expected to hold a hearing and take up the bill as early as the end of next month. It will then go through a process of being combined with a similar bill that passed the Agriculture Committee, after which a decision will be made on whether to bring it to the floor.

In the industry, some are also raising the possibility that the bill could be handled as early as May. Still, observers say the timeline could be delayed due to political variables such as election-related legislation and developments in the Middle East.