On May 4, 2026, just as the U.S. stock market opened, the most controversial "interest provision" of the CLARITY Act was pressed down on the compromise button: on one hand, it explicitly prohibits paying passive interest on idle balances of such anchor-type payment tokens; on the other hand, it leaves room for rewards based on actual transactions or usage behaviors—cashbacks, points, and membership benefits tied to consumption are written into imaginable compliance scenarios. For traditional banking, this means that the deposit interest business does not have to face a new competitor that could "offer high interest" at any time; for the crypto industry, it means retreating from the edge of "high-yield savings products" back to the main battlefield of "payment and trading tools," in exchange for an opportunity for clearer federal-level rules. This compromise has been interpreted by multiple reports as a political balance between protecting the banking system and leaving room for innovation in the emerging industry, and it is seen as a key obstacle cleared for the Senate Banking Committee to initiate deliberations on the CLARITY Act, opening a crack for the subsequent legislative process.

At the same moment this crack was pried open, the market sentiment displayed on the screen was fragmented: the Dow Jones index fell about 0.30% during the opening phase, traditional blue chips were under pressure, while crypto-related stocks took off in the opposite direction. The CRCL U.S. stock tokens and Circle stocks on Bitget fluctuated in gains of about 8.5%–9.2%, and Coinbase (COIN) saw its stock price or tokenized stock record an intraday increase of about 4%–5%, as if voting with real money for this regulatory compromise. For many investors, this is not just a fine-tuning of terms, but a signal: as long as the outline of the federal regulatory framework gradually becomes clear, those crypto companies betting on compliance paths may stand on a more favorable side in the future rules game.

Prohibition of Passive Interest: The Defensive Boundary of Regulation and Banks

What supports this round of strong performance in crypto stocks is not just an emotional turning point, but a red line that has finally been written into the text—profits. Early in the process of advancing the CLARITY Act, lawmakers, the banking industry, and crypto companies had been in a tug-of-war over the question of "whether to pay interest on idle money." Words like annual yield and APY had set off alarm bells in traditional banks: if on-chain issuers could pay interest on idle balances in users' wallets like they would for a demand deposit account, how could banks compete for deposits? Because of this, the interest provision has always been one of the key obstacles to the bill entering formal review by the Senate Banking Committee.

The compromise reached on May 4 made a delicate cut on this red line: it prohibits any form of passive interest payment on idle balances but allows for rewards mechanisms designed based on real usage behavior. In other words, the "idle" balance in the wallet can no longer carry the label of fixed annual yield, but cashbacks, points, or membership rights can be triggered when specific actions like consumption, transfer, or bill payment occur. This is a deliberate delineation: as long as it is viewed as a "payment and trading tool," it can incentivize circulation through cashback-like methods; once it becomes a high-yield savings alternative that "sits there earning interest," it is pressed down by lawmakers on the prohibitive key.

In market interpretation, this arrangement is seen as a compromise that builds moats for both systems. On one side, traditional banks gain their most concerned commitment: on-chain issuers cannot package idle balances as deposit-like products to compete with banks for interest; on the other side, the crypto industry preserves the space for product design around actual trading behaviors, still able to use cashbacks, points, and membership systems to attract user stickiness. Profits are no longer a "game of money sitting idle," but are re-embedded into payment scenarios. This prohibition of passive interest serves as both a defensive boundary drawn by regulation for the banking system and a clear signal of CLARITY's attempt to redefine the functional positioning of crypto payments.

From Yield Products to Payment Tools: Reshaping the Industry Landscape

When the prohibition on earning interest on idle balances is drawn, crypto tokens linked to fiat currencies can hardly be packaged as "high-yield deposit substitutes." Market analyses quickly provided a new narrative: under the CLARITY Act, these types of tokens are more clearly directed toward payment and trading scenarios, rather than being passive savers earning profits. The previous tug-of-war over the interest provision was essentially a battle for narrative control—whether to frame it as a "deposit account" or as "settlement chips on a payment network." After the compromise plan was implemented, product managers could only embed rewards into specific actions such as card swiping, transfers, or membership activities; the story shifts from "put it in and earn annual yield" to "the more you use, the more you earn," forcing the entire industry back to competition in efficiency and coverage of payment networks rather than relying on interest arbitrage.

For on-chain protocols and centralized platforms, the change in space is even more direct. The limitation on profits means that the product space directly paying interest based on balances is compressed, and the DeFi and CeFi models that previously piled up annual yields based on account scale face tightened compliance boundaries, leaving only the room to innovate around real trades or activities—transaction mining must be rewritten into cashbacks tied to trading volumes, and wealth management products need to be broken down into "usage-oriented" incentives like payment points, consumption discounts, and membership rights. The business focus naturally shifts from "attracting deposits" to "promoting usage": those who can push the token more into e-commerce settlements, cross-border remittances, and trading matches will have more space to reward within the compliance framework, with profit logic being re-bound to trading depth and payment frequency, rather than the volume of static balances.

On the other end of this rule set is the reconfiguration of the landscape of compliance-oriented entities. The CLARITY Act was originally aimed at establishing a federal regulatory framework for such tokens within the United States; now, with profit boundaries made clearer, it has instead strengthened the advantages of players predominately in payment and custody. Companies like Circle and Coinbase, which hold licenses and emphasize payment networks and custody services, are viewed as potential beneficiaries. During the opening phase on May 4, 2026, amidst a 0.30% drop in the Dow Jones index, the crypto sector remained strong overall, with the CRCL stock token and Circle stocks on Bitget gaining about 8.5%–9.2%, and Coinbase's stock or tokenized stock increasing about 4%–5%. The market interpretation is that with the regulatory framework clarified and functional positioning reverted to payments, these institutions can adopt a more "bank-friendly" posture to meet the trading and payment demands under the new rules.

Crypto-Related Stocks Surge Against the Trend: The Premium of Regulatory Clarity Emerges

On the same market screen, one side saw the Dow Jones index slowly declining by about 0.30% during the opening phase, while the other side saw crypto-related stocks collectively in the green. In the morning of May 4, the CRCL stock token and Circle stocks on Bitget quickly surged to about 8.5%–9.2%, and Coinbase’s stock or tokenized stock hovered around a 4%–5% intraday increase. While the overall market sentiment was weak, the crypto sector staged a "countertrend independent market," and the most straightforward explanation is that the market is giving two completely different valuations for the same piece of news: traditional blue chips digest macro concerns and a drop in risk appetite, while the subjects related to the CLARITY Act enjoy a sudden "regulatory premium."

The core of this premium is not about how much business increments can immediately come from the compromise on the profit mechanism, but how multiple reports interpret it as clearing one of the key obstacles for the Senate Banking Committee to start the markup process. For funds, this means that the path forward for the CLARITY Act is reignited, and the federal-level rules have transformed from "not knowing if it will come" to "knowing which committee is next and how the process will proceed." Under such expectations, platforms like Circle and Coinbase, highly compliance-oriented entities, are seen as most likely to "sit at the center of the table" within the future federal regulatory framework, and thus they are the first to gain revaluation. Funds are betting on the narrowing of the discount brought by regulatory predictability, rather than a one-time policy stimulus; the crypto sector's strength that day recalls a collective bet aimed at "interpretable rules," rather than a fleeting thematic speculation.

The Senate Takes a Small Step: The Federal Framework is Still on the Way

The compromise on the profit mechanism pulls attention back to Washington from trading terminals. Multiple reports mention that this compromise is seen as clearing the key obstacle for the Senate Banking Committee to initiate formal markup deliberations—without a consensus on "whether to allow interest to be paid on idle balances," the bill wouldn’t even qualify to enter the committee meeting room. For those familiar with the workings of the U.S. Congress, the markup in the Banking Committee is not a ceremonial process, but a real "text battle": Senators modify, add, or delete additional conditions to the text line by line during this phase, before finally voting on whether to advance the bill to the whole chamber's agenda.

However, entering the committee is just the first checkpoint in the U.S. legislative chain. Typically, an industry foundational bill like CLARITY must first complete the markup in the Banking Committee, then be voted on in the full Senate, and afterwards undergo a similar process in the other chamber, culminating with the President's signature before it can truly become federal law. The compromise on the profit provisions merely helps push the "committee door" open a crack, granting this proposal, aimed at establishing a unified federal regulatory framework for dollar-linked on-chain payment tools in the U.S., a chance to transform from a discussion draft into a text that can be substantively circulated in Congress, rather than being shelved in the corridors.

More realistically, the federal framework is still quite distant from being realized. As of May 4, 2026, publicly available information has yet to provide a specific date for the markup of CLARITY by the Senate Banking Committee, meaning when and in what form the bill will next approach the hurdle remains unknown. As long as it is still in the stages surrounding the committee, every representation about the profit model could be reopened, and other key provisions might also be adjusted or even reverted to the starting point. Before inter-chamber negotiations and final signing arrive, the industry is currently betting on one direction—that Congress will build a federal framework for these types of on-chain payment and trading tools—rather than fixed regulations whose uncertainties remain looming above, which have not simply disappeared due to a single compromise on profits.

A New Balance After Profit Limitations: Opportunities and Costs for Compliance-Oriented Players

The compromise on profits has drawn a clear dividing line between bank balance sheets and on-chain token products: prohibiting passive interest payments on idle balances addresses the core concern of traditional banks about "unfair competition"; yet it retains space for designing cashbacks, points, and membership rights based on real trading or activity behaviors, thus not completely stifling the imagination for product innovation. In this sense, it serves both as a protection of the banking system and as a "functional correction" for on-chain payment and trading tools—market analysis generally believes this will more clearly lock them into the lanes of payments, settlements, and liquidity management, rather than being packaged as high-yield savings substitutes. On May 4, the Dow Jones index fell about 0.30%, contrasting with the overall strength of crypto-related stocks, with Bitget's CRCL U.S. stock tokens and Circle stocks rising about 8.5%–9.2%, and Coinbase's stock or tokenized stock increasing about 4%–5%. This countertrend surge reflects investors' bets on the clarity of the regulatory framework—those who can first adjust their business structures within this new red line are expected to lead in payment networks, custody services, and compliance-driven profit designs.

However, this new balance is also a cost list. For models that once relied on high annual yields to attract stagnant funds, the prohibition of passive interest means some business premises are directly stripped away, and future active space will more concentrate on transaction-driven profits, scenario-based cashbacks, and closer collaboration interfaces with the banking system. The CLARITY Act is positioned as foundational legislation for federal regulation in this area, and whether during the Senate Banking Committee's review phase or during the specific regulatory agencies' development of implementation details, the games surrounding profit provisions will not cease; the differing understandings of "profits" between traditional banks and the crypto industry will continue to drive adjustments—even redrawing—of regulatory red lines. For compliance-oriented issuers and trading platforms, the opportunity lies in preemptively adapting to the rules, exchanging compliance dividends for valuation premiums, while the cost must accept the premise of the commercial model being repeatedly sculpted by regulation, and in the constantly changing boundaries, answer anew: in a world no longer relying on passive interest, what profit structure is safe enough, transparent enough, and enticing enough.

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