CLARITY Act Final Text Released as Tillis-Alsobrooks Compromise Clears Path to Markup

Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) released the finalized compromise text for the Digital Asset Market CLARITY Act on May 1, 2026, unlocking what crypto-industry observers had called the single biggest obstacle to the bill's Senate markup. Prediction market Polymarket registered a 9-point jump in passage odds to 55% within hours of the text's release, reversing a weeks-long slide that had pushed expectations to a three-month low of 46% in late April. The Senate Banking Committee has since signaled a markup hearing for the week of May 11.

The Stablecoin Yield Compromise

The central dispute in months of Senate negotiations concerned how stablecoin issuers and the exchanges that list them could reward customers for holding digital dollars. Banks had lobbied aggressively for a blanket prohibition, arguing that yield-paying stablecoins could trigger deposit outflows from the traditional banking system. The final Tillis-Alsobrooks text threads that needle with functional-equivalence language.

Under the agreed wording, no entity covered by the bill may pay any interest or income to customers solely for holding stablecoins when that payment is economically or functionally equivalent to interest on a bank deposit. The ban extends beyond stablecoin issuers to third-party platforms, including cryptocurrency exchanges and their affiliates, closing a gap in the GENIUS Act signed into law by President Trump on July 18, 2025, which addressed issuer-level restrictions but left secondary-market practices unresolved. Platforms are additionally barred from paying income on inactive balances.

The compromise preserves a meaningful carve-out: rewards tied to bona fide activities such as payments, transfers, or genuine platform engagement are explicitly permitted, provided they do not satisfy the equivalence test. The bill also directs federal regulators to develop a disclosure framework and publish a list of acceptable reward activities, giving industry a clearer compliance roadmap than prior drafts offered.

"In the end, banks managed to tighten restrictions on rewards, but we preserved what truly matters: the ability for Americans to earn rewards for real use of crypto platforms and networks."

Faryar Shirzad, Chief Policy Officer, Coinbase [1]

Coinbase, which had initially rejected a similar framework in January before reversing course in April after Treasury Secretary Scott Bessent publicly called for a markup, endorsed the final text through its policy team. The Blockchain Association called the deal a positive step and urged the committee to proceed without delay, citing the release as clearing the path for markup of comprehensive market structure legislation. [2]

Market Structure Provisions and SEC-CFTC Jurisdiction

Beyond the stablecoin yield question, the CLARITY Act establishes the first statutory classification of digital assets across three regulatory regimes. Digital commodities, including Bitcoin and Ethereum, fall under CFTC oversight once their networks are deemed sufficiently decentralized under the bill's mature blockchain test. Investment contract assets, such as tokens distributed in presales, remain subject to SEC disclosure and reporting requirements until they graduate to commodity status. Payment stablecoins are governed by banking regulators under the existing GENIUS Act framework.

The bill also includes the Blockchain Regulatory Certainty Act (BRCA) as Section 604, protecting non-custodial software developers from classification as money transmitters under the Bank Secrecy Act, a provision the industry had treated as a non-negotiable red line. A reconciliation between the Banking Committee version and the Agriculture Committee's Digital Commodity Intermediaries Act, which cleared that panel in January, will still be required before a full Senate floor vote.

Legislative Timeline and Polymarket Odds

Alex Thorn, Head of Corporate Research at Galaxy Digital, noted that the text's release signals the Senate Banking Committee's readiness to set a formal hearing date, with a markup most likely occurring the week after May 11. He also flagged increased opposition from banks as a factor to monitor heading into committee proceedings. [3]

The five-step path to enactment remains demanding: Senate Banking Committee markup, a 60-vote Senate floor passage, reconciliation with the Agriculture Committee version, reconciliation with the House-passed CLARITY Act (which cleared the House 294-134 in July 2025), and a presidential signature. Senator Cynthia Lummis (R-WY) has warned that failure to pass the bill in 2026 could push comprehensive market structure legislation back to 2030 or later. [4]

Milestone — Date — Detail

House passage (294-134) — July 17, 2025 — Bipartisan vote; all 216 Republicans in favor

Senate Banking ANS released — January 12, 2026 — 278-page draft; markup postponed after yield dispute

Agreement in principle — March 20, 2026 — White House brokered preliminary yield deal

Polymarket peak odds — February 2026 — 82% passage probability

Polymarket late-April low — April 2026 — 46%, driven by markup delays

Final text released — May 1, 2026 — Tillis-Alsobrooks yield compromise published

Polymarket odds post-release — May 1, 2026 — 55%, up 9 points on the day

Senate Banking Committee markup — Week of May 11, 2026 — Scheduled following text release

What Changed Between January and May

The January draft's yield prohibition was broad enough that Coinbase publicly rejected it, describing the language as incompatible with activity-based crypto rewards programs. Three subsequent rounds of negotiation, with active involvement from the White House Council of Advisors for Digital Assets and Treasury Secretary Bessent, produced the current functional-equivalence standard. The revised text narrows the prohibition to rewards that mimic bank deposit interest while explicitly carving out credit-card-style points, cashback, and genuine transaction-linked incentives.

The GENIUS Act's earlier stablecoin framework addressed issuer-level interest bans but left a legal gap for exchanges and affiliates offering yield-like products on secondary markets. The new CLARITY Act language closes that gap explicitly, satisfying the banking lobby's core concern about deposit competition while giving crypto platforms a workable definition of what rewards remain permissible.

With stablecoin yield language resolved, negotiators say attention now turns to finalizing DeFi provisions, securing remaining Republican votes on the Banking Committee, and reconciling residual differences around Section 505 provisions governing SEC exemptive authority over tokenized securities. Chairman Tim Scott (R-S.C.) has stated that Republican unity on the committee remains a prerequisite for calling a markup vote. [5]

References

[1] Forbes, "Tillis-Alsobrooks Reach Compromise On Stablecoin Yield In Clarity Act," May 1, 2026. https://www.forbes.com/sites/jasonbrett/2026/05/01/tillis-alsobrooks-reach-compromise-on-stablecoin-yield-in-clarity-act/

[2] ForkLog, "CLARITY Act Finalizes Stablecoin Yield Provisions," May 2, 2026. https://forklog.com/en/clarity-act-finalizes-stablecoin-yield-provisions/

[3] BeInCrypto via Yahoo Finance, "Coinbase Backs CLARITY Act Compromise Banning Passive Stablecoin Yield," May 2, 2026. https://finance.yahoo.com/markets/crypto/articles/coinbase-backs-clarity-act-compromise-101555084.html

[4] Galaxy Digital Research, "CLARITY Act Update: Final Push Ahead," April 22, 2026. https://www.galaxy.com/insights/research/clarity-act-update-final-push

[5] 247 Wall St. via Yahoo Finance, "Polymarket's CLARITY Act Odds Just Hit a Three-Month Low," May 1, 2026. https://finance.yahoo.com/markets/crypto/articles/polymarket-clarity-act-odds-just-214143647.html

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