How the CLARITY Act’s 360-Day Rulemaking Reshapes Stablecoin Yields

The CLARITY Act's Section 404 — the 360-day rulemaking window that follows enactment — has become the operative variable for stablecoin builders, well ahead of the Senate's September 15 cloture vote. According to Forkast's reading of the May 2026 Senate Banking draft, the Tillis-Alsobrooks compromise prohibits digital asset service providers from paying interest or yield on payment stablecoins, closing the intermediary-side gap that the GENIUS Act's Section 4(a)(11) left open by addressing issuers. The two statutes now form a dual framework: yield is restricted on both sides of the rail.

The Yield Restriction, Mechanically

Section 404(c) enumerates a narrow list of permissible activity-based rewards: transaction incentives, payment facilitation, staking, loyalty programs, and subscription services. The statute does not per se prohibit balance- or tenure-based rewards, but only if the underlying activity is "bona fide" — tied to usage rather than passive holding. The interpretive load falls entirely on Treasury, the SEC, and the CFTC, which are directed to issue a joint rulemaking producing a non-exhaustive list of qualifying activities.

That three-agency process is the structural pivot. By pulling Treasury into stablecoin oversight, the bill ties the competitive fate of payment stablecoins to the federal mandate for dollar primacy — and, by extension, to Treasury market demand for sovereign debt. The draft's reporting requirement, which extends deposit-outflow data collection to include effects on Treasury market functioning, signals that regulators will evaluate stablecoin competition against its impact on government financing, not against consumer-protection metrics alone.

The 360-Day Window, and What Survives It

The compliance calculus during the rulemaking window is austere. A $5 million civil penalty per violation, enforceable by Treasury on referral from the SEC or CFTC, makes aggressive yield structures an unrewarding bet. Platforms that can document genuine transaction volume, payment utility, or governance participation have a defensible path through any version of the final rule. Those reliant on yield as the primary growth lever face a structural transition toward integration, liquidity, and user experience — the three axes on which a non-yield-bearing stablecoin gets monetized.

The loyalty-program carveout under Section 404(c) is the most likely venue for builders seeking to retain yield-like economics within the statute's bounds. Platforms that already operate membership and retention programs — where the reward is tied to engagement rather than balance — have a template. The mechanics of loyalty embedded finance demonstrate how programmable utility structures can substitute for balance-based incentives: the unit of value shifts from the token's holding period to the user's transaction profile.

The Legislative Path

The political path remains narrow. Thune filed the cloture motion on August 8, but the Senate does not reconvene until mid-September, and prediction markets currently price passage at roughly 15%. As CoinGape reports, Senators Lankford (R-Okla.) and Rounds (R-S.D.) have flagged concerns over deposit flight from community banks, with as many as five GOP holdouts signaling similar unease. The July 13 letter from the ABA, ICBA, and 76 state banking associations to Thune and Schumer crystallized the banking lobby's position. Senator Lummis has countered that activity-based rewards are functionally distinct from deposit interest — a position that, if preserved in the final rule, retains the genuine-activity path for builders.

The theoretical limit of the model is the gap between what the joint rulemaking permits and what platforms can defend under enforcement. If Treasury, the SEC, and the CFTC narrow "bona fide activity" aggressively, the Section 404(c) carveouts shrink to a near-empty set and the yield prohibition becomes absolute in practice. If the rule preserves a broad usage-based definition, the 360-day window becomes a defensive moat for platforms that already have real transaction volume. The stress-test question is whether regulators will treat balance-tiered loyalty programs as bona fide usage or as thinly veiled yield — and on that determination, the entire competitive structure of payment stablecoins now hangs.