Stablecoin Shakeup: CLARITY Act Bans Yield, Tether Audited by Big Four

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Stablecoin Update: CLARITY Act Leaked, Circle Stock Drops, Tether Calls in the “Big Four”

Key Takeaways:

  • Leaked CLARITY Act text would ban stablecoin yield “directly or indirectly,” including anything resembling bank deposit interest
  • Activity-based rewards tied to user behavior may still be permitted under the proposal
  • Industry reaction is split – some call it a “departure” from prior White House discussions, others say it’s the best realistic outcome
  • Tether announces its first full independent audit by a Big Four firm as regulatory pressure mounts across the stablecoin sector

These changes aren’t happening by chance. They show that the industry is being pushed to mature and evolve quickly.

The Leak

A new version of the CLARITY Act is making waves this week. Journalist Eleanor Terrett shared an internal email detailing the draft on X, and it appears to be stricter than many in the crypto world anticipated. The draft represents a compromise attempt regarding the issue of yield, which has been a major point of disagreement between lawmakers and the crypto industry.

The new plan would prevent platforms from offering any kind of return on stablecoins, whether directly, through hidden methods, or in a way that mimics a bank account. This rule applies to all digital asset companies – including exchanges and brokers – and is written to prevent them from finding loopholes. Essentially, anything that acts like interest is prohibited.

The bill includes a limited exception for rewards programs. Loyalty points, promotions, and subscription benefits linked to customer activity would still be allowed, as long as regulators don’t consider them the same as earning interest. Within one year of the bill becoming law, the SEC, CFTC, and Treasury Department would work together to clearly define what types of rewards are acceptable and create rules to prevent people from trying to get around the regulations.

Industry Reads the Room Differently

People familiar with the document have had mixed reactions, and that split in opinion is noteworthy.

According to one industry source, the latest proposal is a significant shift from previous discussions with the White House. The main worry is that the term “economic equivalence” is too unclear, potentially allowing regulators to broadly define it and restrict incentive programs that weren’t initially targeted. Additionally, limitations on rewarding customers based on account balances or transaction activity create further challenges for companies developing stablecoin products.

“Overall, this is a more narrow and restrictive approach toward crypto,” that person said.

Another source took a more balanced approach. They believe the document is mostly in line with what industry experts expected – it maintains rewards for processing transactions but clearly prohibits stablecoins from operating like traditional savings accounts. This framework is also more expansive than a previous proposal from Tillis and Alsobrooks, which would have placed stricter limits on the industry.

“This is the best possible result,” they said.

Bank officials are expected to review the current version soon, and their feedback will be a key indicator of any remaining disagreements or issues.

Why This Matters Beyond Washington

Shares of Circle fell 20% to $101.17 after updates on the CLARITY regulatory framework were announced, showing that the market is closely watching how these regulations unfold. The main concern centers around the returns stablecoins offer. These digital currencies have become a key source of liquidity in the crypto market, and their ability to earn interest is a major draw for users. Limiting those returns wouldn’t eliminate stablecoins, but it would significantly change why people hold them.

This isn’t just a hypothetical worry. The failure of TerraUSD in 2022 clearly showed how easily this market can fall apart if its core systems have problems. Today, the stablecoin market is bigger and more connected to the financial system than it was back then, meaning the consequences of poor regulation are much greater.

Tether Makes Its Move

The leading stablecoin provider announced it has hired one of the four largest accounting firms to perform its first comprehensive independent financial audit. The company claims this audit is the biggest of its kind ever undertaken, considering the size of its operations.

Tether’s USDT is a major digital currency with a market value exceeding $184 billion and over 550 million users worldwide. Critics have often pointed out that it hasn’t undergone a complete independent audit. While Tether has previously used attestations – a common practice for stablecoins that involves a less detailed review – they are now planning to move towards a more thorough audit process.

The initial phase of the audit, where firms reviewed Tether’s internal processes, systems, and financial reporting, finished a few weeks ago. Several of the largest accounting firms reportedly wanted to be involved, and Tether sees this as proof of how important the audit is.

Simon McWilliams, who became CFO in early 2025, played a key role in getting the company’s finances ready for a thorough review. He explained that a leading accounting firm was chosen after a competitive bidding process, as the company already follows the high standards those firms require, and the audit will definitely take place.

Tether announced it will be shifting its listed securities in the next few days to improve how its reserves are managed. This is noteworthy considering the current regulatory climate.

The Bigger Picture

Stablecoins are now a significant part of the global financial system, and it’s no longer possible for them to operate without clear rules. The potential CLARITY Act, even in its current form, shows that Washington is preparing to regulate this sector. Tether, a major stablecoin provider, recently announced an audit, suggesting they’d prefer to proactively establish these rules themselves rather than wait for regulations to be imposed, especially given past concerns about their transparency.

The success of the CLARITY framework for the industry hinges on how regulators define “economic equivalence,” and this definition won’t be clear from the law itself. Instead, it will be shaped through years of official interpretations and how the rules are applied in practice.

As Chris Giancarlo, known as “Crypto Dad” and former chairman of the CFTC, pointed out, U.S. banks stand to be the only losers if the CLARITY Act doesn’t move forward. This means American regulators have no option but to ensure it becomes law.

This article is just for informational purposes and shouldn’t be taken as financial, investment, or trading advice. Coindoo.com doesn’t support or suggest any particular investment or cryptocurrency. It’s essential to do your own research and speak with a qualified financial advisor before investing.

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2026-03-25 13:31