A new draft of the proposed Clarity Act, led by U.S. Senator Thom Tillis (R-SC) alongside Senator Angela Alsobrooks (D-MY), is expected this week as lawmakers attempt to resolve a growing regulatory dispute over stablecoin rewards.

Core Disagreement Over Stablecoin Yield

The legislation aims to address a long-standing conflict between traditional banking institutions and crypto companies over whether stablecoin holders should be allowed to earn yield or interest, The Block reported.

Earlier legislation, including the GENIUS Act, prohibits stablecoin issuers from directly paying interest to holders but leaves a regulatory gray area. It does not explicitly ban third-party platforms, such as exchanges, from offering yield products, creating uncertainty in enforcement.

Banks argue that allowing stablecoin yields could pull deposits away from the traditional financial system and introduce structural risks.

Crypto firms, including Coinbase (NASDAQ:COIN), counter that restrictions could limit innovation and restrict emerging business models, including potential opportunities for banks to participate in digital asset markets.

Senator Tillis said the draft language is nearing completion, though negotiations remain ongoing and subject to revision.

\He has also suggested convening a Capitol Hill meeting to bring together banking and crypto stakeholders to accelerate consensus.

Stablecoin Activity Slows Across Markets

On-chain data from Ethereum (CRYPTO: ETH) indicates that Tether (CRYPTO: USDT) and USDC activity has fallen to its lowest level of 2026, Santiment data shows. This suggests reduced stablecoin movement and weaker capital rotation across the network.

Such declines typically occur during range-bound market conditions, when trading activity slows and liquidity becomes more stagnant.

However, analysts note that this trend could shift as Bitcoin (CRYPTO: BTC) approaches higher price levels and volatility increases.

Rising market movement often encourages traders to redeploy idle stablecoin capital, potentially boosting on-chain activity and broader market participation.

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