Stablecoins stall on yield as March 1 CLARITY Act nears

• Lyla Velez
• February 20, 2026
• News
• 0 Comments

Key Points:

• Stablecoin yield agreement approaches as negotiators converge under looming deadline.
• Deadline pressure intensifies, forcing clearer choices on stablecoin yield framework.
• Deal momentum builds; time constraints sharpen policy options for stablecoin yield.

Talks at the White House over the CLARITY Act’s treatment of stablecoin yield have accelerated, with a senior adviser signaling the dispute is close to resolution as a March 1 deadline approaches, as reported by CoinGape. The negotiations center on whether platforms can offer rewards or interest-like features on stablecoin balances without undermining bank deposits or exposing consumers to hidden risks.

Progress with banks has been described as incremental, but no final agreement has emerged from the recent series of meetings, as reported by CoinDesk. The remaining gap is narrow enough to keep a deal within reach, but the wording must reconcile innovation goals with guardrails acceptable to traditional finance.

A key sticking point is statutory language: a draft approach would restrict yield features at the design level, with participants stressing that specific phrasing could determine how rewards are categorized and supervised, as reported by Ledger Insights. That places unusual weight on definitions of “interest,” “rewards,” and “programmatic yield” in the bill text.

What stablecoin yield means and why it’s contentious

In this debate, “stablecoin yield” refers to rewards or interest-like benefits paid to users who hold fiat-referenced tokens, typically funded by issuers’ reserve income or platform incentive programs. Banking trade groups, including the American Bankers Association, have pushed for a broad ban on these features on competitive and prudential grounds, as reported by Forbes.

Crypto industry groups counter that well-defined, transparent rewards are central to U.S. competitiveness and payments innovation, and they have characterized the recent meetings as a constructive step even without a deal, as reported by KuCoin News. They argue that prohibitions could entrench offshore providers and diminish the domestic role in dollar-backed tokens.

Analysts caution that restrictive rules could push issuers and capital to foreign jurisdictions, encouraging regulatory arbitrage and weakening U.S. policy influence over dollar-linked tokens, as reported by InteractiveCrypto. Policymakers weighing competitiveness also face the risk of ceding market share to venues with lighter-touch regimes.

Other experts emphasize financial-stability considerations: consumers can treat yield-bearing stablecoins like deposits without the same protections, and stress events could trigger runs on reserves, as reported by the Financial Times. Clear disclosures and supervisory clarity could mitigate, but not eliminate, such risks.

The policy discussion has narrowed to scope, with some officials favoring a targeted fix focused on “idle yield” rather than an industry-wide ban. “Use a scalpel, not a sledgehammer,” said Patrick Witt, White House crypto adviser.

March 1 deadline: what’s at stake right now

The White House has set an end-of-February target for joint language on the CLARITY Act’s stablecoin yield provisions to enable movement by March 1, concentrating attention on final definitions and consumer safeguards, as reported by Crypto-Economy. Stakeholders are working against the clock to avoid ambiguities that could be exploited or chill compliant innovation.

If talks fail to produce text by the deadline, broad crypto market-structure legislation could stall for much of the year as electoral politics crowd the calendar, as reported by Gate. In that scenario, federal clarity on yield would likely defer to a patchwork of state regimes and cautious industry self-policing.

In the near term, outcomes range from a narrow allowance for limited, clearly disclosed rewards to a prohibition on interest-like features that resemble deposit-taking, with enforcement thresholds defined in statute. Each path carries trade-offs for consumer protection, bank deposit stability, and the competitiveness of U.S.-issued stablecoins.

As a contextual marker, at the time of this writing PayPal Holdings (PYPL) last closed at $41.65, down 0.19% on the day, based on data from Yahoo. While not determinative for policy, payment-sector equity sentiment often reflects investor expectations about digital finance infrastructure and regulation.