TLDR
- On May 5, 2026, Senators Thom Tillis and Angela Alsobrooks announced their Section 404 stablecoin yield agreement is complete and closed to further revision
- The agreement prohibits stablecoin rewards resembling traditional bank deposit interest while permitting rewards tied to user activity
- Despite objections from banking industry representatives, lawmakers have declared negotiations concluded
- The Senate Banking Committee plans a markup session in mid-May, potentially leading to a floor vote by June or July
- Prediction market Polymarket shows 70% probability of the CLARITY Act passing into law during 2026
In a joint announcement delivered May 5, 2026, Senators Thom Tillis and Angela Alsobrooks confirmed their cross-party agreement on Section 404 of the Digital Asset Market Clarity Act has reached its final form.
Both lawmakers emphasized that continued resistance from traditional banking institutions would not trigger renewed negotiations. Their position was unambiguous: “We respectfully agree to disagree.”
This settlement resolves a major point of contention within the proposed legislation. The provision prohibits stablecoin reward programs that are “economically or functionally equivalent” to interest payments on conventional bank deposits.
Simultaneously, the framework protects the ability of cryptocurrency platforms to distribute activity-linked incentives. Such rewards can be connected to trading volume, staking participation, or other forms of platform engagement.
Traditional banking organizations have expressed alarm about potential deposit migration. Their primary concern centers on consumers potentially transferring funds from bank accounts into stablecoin programs that deliver deposit-like yields.
The American Bankers Association alongside allied trade groups have voiced dissatisfaction with the settlement terms. According to their assessment, the current wording remains insufficient to safeguard traditional deposit mechanisms.
The senators recognized that banking sector representatives participated throughout the negotiation process. While acknowledging that industry input was considered and certain modifications were incorporated, they stressed the fundamental framework would remain unchanged.
Senate Timeline and Next Steps
Senate Banking Committee Chairman Tim Scott indicated Monday that “real progress” is occurring on digital asset regulatory frameworks. He referenced a committee markup session planned for mid-May.
Senator Cynthia Lummis characterized the stablecoin yield settlement as complete and indicated the CLARITY Act is approaching final passage.
Coinbase Chief Legal Officer Paul Grewal praised lawmakers for forging bipartisan consensus. Coinbase CEO Brian Armstrong urged immediate committee action on the cryptocurrency legislation.
Should the Senate Banking Committee conduct its markup during mid to late May, a complete Senate floor vote could materialize in June or July.
President Trump has previously stated he would immediately sign the CLARITY Act upon congressional approval.
Market Reaction
Polymarket probability estimates for CLARITY Act enactment in 2026 rose to 70% after the senators’ declaration. This represents the highest confidence level recorded in more than a month.
Circle equity jumped 20% following confirmation that the stablecoin yield settlement had achieved finality.
The comprehensive Digital Asset Market Clarity Act additionally establishes clear jurisdictional boundaries between the SEC and CFTC regarding digital asset oversight.
This regulatory precision has represented a significant barrier to institutional capital deployment. Clear statutory parameters determine where innovators can operate and which regulatory body maintains oversight authority.
The Senate Banking Committee markup session, scheduled for mid-May, has emerged as among the most anticipated regulatory developments in cryptocurrency for 2026.
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