Senate Unveils 278-Page ‘Clarity’ Draft; Coinbase Threatens Walkout Over Yield Ban

The Lead

The Senate Banking Committee released a 278-page draft of the Digital Asset Market Clarity (CLARITY) Act late Monday, just 48 hours before a scheduled Jan. 15 markup. The text includes a controversial compromise on stablecoins: issuers cannot pay interest solely for holding tokens, but rewards tied to "active participation" remain legal. Coinbase (COIN), which generated nearly $1.3 billion in stablecoin revenue in 2025, has threatened to withdraw support if the provision stands.

The ‘Bank Compromise’

The draft attempts to shield traditional banks from deposit flight. By banning passive yield, effectively treating stablecoins like non-interest-bearing checking accounts, lawmakers aim to prevent fintechs from outcompeting regional banks on rates without holding bank charters. However, the bill creates a specific exemption for "active" utility.

According to text reviewed by Fox Business’ Eleanor Terrett, permitted rewards include:

• Staking and network governance participation.
• Providing liquidity or posting collateral.
• Executing specific transactions.

"Interest cannot be paid simply because a balance is being held," the draft states, directly targeting the ‘savings account’ model used by many centralized exchanges.

Coinbase’s $1.3B Problem

The distinction poses a direct threat to Coinbase’s revenue model. The exchange earns interest on the reserves backing USDC (via its partnership with Circle) and passes a portion to customers as rewards. If the bill forces users to actively deploy capital into on-chain protocols to earn yield, the stickiness of idle exchange balances evaporates.

Coinbase shares (COIN) traded flat at $245 Tuesday morning as the company signaled it might lobby against the bill entirely. "They view this as an existential line in the sand," noted one policy analyst. "If they can’t offer passive yield, they lose their main wedge against traditional brokerage accounts."

Institutional Context

Senate Banking Chair Tim Scott (R-S.C.) and Senator Angela Alsobrooks (D-MD) are attempting to thread a needle between banking lobbyists and crypto innovators. The banks argue that allow stablecoin issuers to pay yield without FDIC insurance creates systemic risk. The compromise, forcing yield seekers into riskier, active on-chain roles, satisfies the bank lobby by making stablecoins less like risk-free deposits.

The markup proceeds Thursday, Jan. 15. If the provision survives committee, the industry faces a binary choice: accept a regulated market structure that handicaps its simplest product, or kill the bill and remain in regulatory limbo.