CLARITY Act Fight Over Dollar Yield and DeFi Liquidity

The Digital Asset Market Clarity (CLARITY) Act, delayed until the end of January, has become a battleground concerning who will intermediate onchain US dollar yield: open decentralized finance (DeFi) protocols or a select group of large banks and custodians. Critics, including stablecoin issuers and institutional DeFi platforms, fear the latest draft tightens restrictions on stablecoin rewards in a way that could push onchain credit activity offshore rather than making it safer domestically. Coinbase recently withdrew support, signaling industry unease that the bill favors incumbents. Industry leaders like Jakob Kronbichler and Ron Tarter warn that constraining compliant onchain yield structures will lead to offshore migration, losing the US both innovation and visibility. A key point of contention is the phrase "solely in connection with holding," which seems to differentiate passive interest from activity-based incentives. A bright spot noted is the bill's current distinction that developers of non-custodial software are not treated as financial intermediaries. Ultimately, industry advocates seek a light regulatory touch that protects users without stifling compliant innovation or creating a rewards regime only affordable for the largest custodians.

(Source：Cointelegraph)