Senate Banking Committee Tackles Stablecoin Yield and DeFi Regulation in Latest CLARITY Act Review

The Senate Banking Committee’s markup session is bringing stablecoin yield and DeFi regulations into sharp focus, with lawmakers submitting 137 competing amendments to shape how digital assets will be governed. This latest round of policy debate highlights the intense disagreement over how to regulate emerging financial mechanisms in the crypto space.

Breaking Down the Regulatory Battleground

The committee released its 278-page CLARITY Act draft following five months of bipartisan deliberation, marking the first time the industry could examine the full legislative language. By the Tuesday submission deadline, lawmakers had tabled 137 separate amendment proposals, each attempting to clarify definitions or close perceived regulatory loopholes.

Two primary friction points have emerged in today’s defi news landscape. First, stablecoin yield mechanisms are drawing significant attention from both parties. Sens. Angela Alsobrooks and Thom Tillis jointly filed amendments aimed at establishing clearer parameters around what constitutes permissible yield-generating activities. The core challenge lies in drawing a sharper line between compliant yield structures and prohibited financial arrangements that could undermine stablecoin stability.

DeFi Protocols Face Heightened Scrutiny

The decentralized finance sector confronts its own regulatory hurdles. Sens. Pete Ricketts and Cynthia Lummis proposed revisions addressing how the bill would treat DeFi protocols, responding to industry concerns that the original language created unnecessary uncertainty. Meanwhile, Sen. Chris Van Hollen introduced ethics-focused language designed to prevent government officials from profiting off crypto-related ventures, alongside disclosure requirements for crypto promoters with financial stakes in the industry.

Warren’s Aggressive Amendment Package Signals Stricter Direction

Sen. Elizabeth Warren’s submission of more than 20 amendments suggests a more restrictive regulatory path. Her proposals include provisions to prohibit yield payments on stablecoins entirely and reverse the OCC’s pro-crypto guidance from the previous year. This contrasts sharply with industry preferences for lighter-touch regulation.

The markup process will continue, though ethics provisions may not receive immediate votes due to the Banking Committee’s limited jurisdictional reach on such matters. The White House Crypto Council has indicated that ethics language may be incorporated after committee passage but before the full Senate vote, meaning additional modifications remain likely even after the markup concludes.

In parallel, the Senate Agriculture Committee has scheduled its own January 27 markup session, with bill text expected the week prior. The convergence of multiple committee actions underscores the comprehensive nature of this regulatory effort and its potential long-term impact on how defi news and digital asset governance evolve.