The proposed Digital Asset Market Clarity (CLARITY) Act is emerging as a pivotal discussion point in the U.S. crypto ecosystem, focusing on who controls yield in onchain US dollar markets. With stablecoin rewards and DeFi incentives at stake, the legislation is drawing sharp divides between decentralized platforms and traditional banking incumbents.
Recent drafts of the CLARITY Act tighten regulations around how stablecoin rewards can be offered, raising concerns among DeFi platforms and stablecoin issuers. Critics warn that overly restrictive rules could push onchain dollar yield offshore rather than fostering a safer, compliant U.S. market. Industry leaders argue that while demand for dollar yield will persist, limiting compliant onchain structures risks concentrating activity among a few large custodians.
Jake Chervinsky, said that;
Coinbase’s recent withdrawal of support highlighted fears that the bill favors incumbent banks over decentralized platforms. Experts emphasize that a key point is distinguishing between entities that control access, custody, or risk, versus developers of non-custodial software. Maintaining this distinction is critical to allow innovation while ensuring institutional confidence.
Regulators and industry observers stress the importance of honest and activity-based yield, as opposed to opaque “rewards for holding,” which can mask dilution or rehypothecation risks. Proposals call for clear disclosure of yield sources, helping users accurately assess risk while preserving opportunities for compliant onchain credit markets.
The outcome of CLARITY will likely shape where U.S.-based onchain credit develops over the next decade, balancing consumer protection with continued DeFi innovation.
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This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.