US stablecoin regulation is at a standstill. Coinbase is holding the line on yield. And the offshore argument is back on the table – so where does the CLARITY Act actually go from here?
Stablecoins dominated the agenda at PAY360 in London last week, and the conversation continued on the Payment Expert Podcast. News Editor Louis Thompsett returns from the conference to dig into the latest developments surrounding the CLARITY Act, joined by Senior Journalist Callum Williams and Business Journalist Kieran O’Connor.
The episode centres on the bipartisan draft proposal’s ban on yield for passive stablecoin balances – the provision that has drawn the most sustained opposition from the industry.
Coinbase has rejected the draft for a second time. CEO Brian Armstrong has been clear that a bad bill is worse than no bill. But is that a principled stand or a commercial one?
The team examines the USDC revenue-sharing arrangement between Coinbase and Circle, and asks what the yield ban would mean for both companies’ negotiating positions when their agreement comes up for renewal.
Armstrong’s opposition is vocal, but the US Senate can pass the bill without him. The more interesting question is whether it wants to – and whether President Donald Trump, whose family’s World Liberty venture issues the USD1 stablecoin, is more aligned with Coinbase’s position than the current draft suggests.
The team also looks at the offshore argument. The Markets in Crypto-Assets Regulation (MiCA) all but bans yield on asset reference tokens.
If every major regulated market closes the door on stablecoin rewards, does that make consumers safer, or does it simply push yield-seeking capital into unregulated structures with no disclosure requirements? The team draws a parallel with the shadow banking migration that followed the 2008 financial crisis.
So, should Coinbase accept the draft as it stands and push for amendments later, or is holding out now the only way to ensure the final legislation is workable?
The team notes that April will bring another look at the draft, with the midterms functioning as an informal deadline – though consensus by the end of April may be overly optimistic…
Episode three of the Payment Expert Podcast is available now on Spotify, YouTube, Apple Podcasts, and all major podcast platforms. To make sure you don’t miss an episode, subscribe to the Payment Expert newsletter.
