TLDR
- On May 5, 2026, Senators Thom Tillis and Angela Alsobrooks announced their Section 404 stablecoin yield agreement is complete and non-negotiable
- The agreement prohibits stablecoin rewards resembling bank deposit interest while permitting rewards based on user activity
- Traditional banking institutions object to the compromise language, but lawmakers have closed further discussions
- Senate Banking Committee markup scheduled for mid-May, potentially leading to a floor vote between June and July
- Prediction market Polymarket shows 70% probability of the CLARITY Act passage in 2026
On May 5, 2026, Senators Thom Tillis and Angela Alsobrooks issued a unified statement announcing the completion of their cross-party agreement regarding Section 404 of the Digital Asset Market Clarity Act.
Both lawmakers emphasized that continued resistance from traditional banking institutions would not trigger additional negotiations. Their position was unambiguous: “We respectfully agree to disagree.”
This agreement resolves a particularly contentious element within the proposed legislation. It prohibits stablecoin yield programs that are “economically or functionally equivalent” to interest payments on traditional bank deposits.
Simultaneously, the compromise maintains the ability for cryptocurrency platforms to provide activity-driven rewards. Such incentives include those connected to trading volume, staking participation, or other forms of platform engagement.
Traditional banking organizations had expressed alarm about potential deposit migration. Their primary concern centered on customers potentially transferring savings into stablecoin programs delivering bank-comparable returns.
The American Bankers Association, along with allied organizations, denounced the compromise framework. Their position maintains that the finalized text inadequately safeguards traditional bank deposits.
The lawmakers recognized that banking sector representatives participated throughout the negotiation process. They confirmed that industry feedback received consideration and prompted certain modifications, though the fundamental agreement remains unchanged.
Senate Timeline and Next Steps
Senator Tim Scott, who chairs the Senate Banking Committee, indicated Monday that “real progress” was underway concerning digital asset regulatory legislation. He referenced a markup session planned for mid-May.
Senator Cynthia Lummis characterized the stablecoin yield agreement as complete and suggested the CLARITY Act’s enactment is approaching.
Coinbase Chief Legal Officer Paul Grewal praised legislators for cultivating bipartisan consensus. Coinbase CEO Brian Armstrong advocated for immediate markup proceedings on the cryptocurrency legislation.
Should the Senate Banking Committee conduct its markup during mid to late May, a complete Senate floor vote might occur in June or July.
President Trump has publicly stated he would sign the CLARITY Act into law without delay upon congressional passage.
Market Reaction
Polymarket probability metrics for CLARITY Act enactment in 2026 increased to 70% after the senators’ announcement. This represents the peak level recorded in more than thirty days.
Circle equity jumped 20% following senatorial confirmation that the stablecoin yield compromise reached its final form.
The comprehensive Digital Asset Market Clarity Act additionally defines the separation of regulatory jurisdiction between the SEC and CFTC concerning digital assets.
This regulatory framework has represented a primary obstacle constraining institutional capital deployment. Clear statutory boundaries establish where innovators can develop products and identify which regulatory body maintains oversight.
The Senate Banking Committee markup, scheduled for mid-May, has emerged as among the most significant regulatory milestones in cryptocurrency for 2026.
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