The U.S. Senate has officially released the discussion draft for the Digital Asset Market Clarity Act of 2026, commonly known as the Clarity Act, setting the stage for a pivotal committee vote scheduled for January 15. While the legislation promises to finally resolve the bitter jurisdictional war between the SEC and CFTC, a controversial provision buried in the 278-page text has sent shockwaves through the crypto industry. The draft proposes a sweeping ban on interest payments for “passive” stablecoin balances, a move that industry insiders warn could kneecap the decentralized finance (DeFi) ecosystem and hand a decisive victory to traditional banks.

A Defining Moment for US Crypto Regulation

After years of regulatory ambiguity and enforcement actions, the Clarity Act 2026 represents the most significant legislative attempt to codify the rules of the road for digital assets in the United States. The bill, which builds upon the framework passed by the House in July 2025, aims to categorize digital assets clearly: “digital commodities” will fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), while assets deemed investment contracts will remain with the Securities and Exchange Commission (SEC).

This division of power addresses the core grievance of the crypto sector—the lack of a clear path to compliance. Under the new rules, the CFTC would gain primary authority over spot markets for Bitcoin, Ethereum, and other decentralized assets, stripping the SEC of its ability to regulate these tokens as unregistered securities. For market participants who have navigated the chaos of SEC vs CFTC 2026 turf wars, the bill offers a long-awaited dedicated regulatory lane. However, the celebration has been cut short by the fine print regarding stablecoins.

The ‘Passive Yield’ Ban: A Blow to DeFi?

The immediate controversy surrounds a specific clause in the Senate Banking Committee’s portion of the draft. According to reports from industry analysts and journalists like Eleanor Terrett, the bill effectively prohibits crypto platforms and issuers from paying interest on stablecoins held passively in user wallets. The draft stipulates that rewards or interest can only be generated through “substantive activities,” such as staking, providing liquidity, or active trading.

This distinction is critical. For millions of retail investors who treat stablecoins as a high-yield savings alternative to traditional bank accounts, the stablecoin interest rules could be devastating. By banning passive yield, the legislation appears to protect traditional banks from deposit flight—a concern aggressively lobbied by banking trade groups over the last year. Critics argue this provision creates an uneven playing field, allowing banks to offer interest on fiat deposits while barring crypto innovators from passing on yield from reserve assets like U.S. Treasuries.

DeFi Regulatory Impact and Industry Backlash

The implications for the Decentralized Finance (DeFi) sector are profound. Many DeFi protocols rely on the attractiveness of stablecoin yields to bootstrap liquidity. If the US Crypto Market Clarity Act passes in its current form, it could outlaw the simple “earn” products that have driven adoption for platforms like Coinbase and various lending protocols. “Banks may have won this round on stablecoin yield,” noted one policy analyst, highlighting that the bill seemingly prioritizes traditional financial stability over digital innovation.

Political Maneuvering Ahead of January 15 Vote

The release of the draft kicks off a frantic 48-hour window for amendments before the Senate Banking Committee’s markup session. Senate Banking Chairman Tim Scott and key negotiators are facing intense pressure from both sides. On one hand, the banking lobby insists that unregulated stablecoin yields pose a systemic risk to the fractional reserve banking system. On the other, crypto advocates contend that restricting yield destroys the utility of stablecoins as a store of value and pushes innovation offshore to jurisdictions with more favorable blockchain regulation news.

The Clarity Act 2026 also introduces stricter consumer protection standards, requiring exchanges to segregate customer funds—a direct response to the market failures of previous years. Yet, the focus remains squarely on the economic model of stablecoins. With the House having already cleared its version of the bill, the Senate’s draft is the final hurdle before a potential reconciliation process. If the stablecoin provision survives the committee vote, it will likely set up a contentious floor debate.

What Comes Next for Crypto Legislation Updates?

As the clock ticks down to the January 15 markup, the crypto lobby is mobilizing to strip or soften the yield prohibition. The argument is simple: in a digital economy, the line between “passive” holding and “active” participation is increasingly blurred. Penalizing users for holding digital dollars could stifle the very adoption the U.S. aims to lead.

For now, the Clarity Act stands as a double-edged sword. It delivers the regulatory clarity the industry has begged for, but at a price that might fundamentally alter the value proposition of crypto’s most important asset class. Investors and builders alike are watching Washington closely—this week could define the future of money in America.