A new draft of the "Clarity for Homegrown Digital Assets Act" (CLARITY Act), circulated on March 24, 2026, proposes strict federal limits that would prohibit stablecoin issuers from distributing interest-rate yields directly to retail holders. The legislation aims to create a definitive framework for dollar-pegged digital assets but argues that the "automated distribution" of yield from underlying reserves transforms a stablecoin into an unregistered investment company or security.
The draft bill specifically targets the growing market of yield-bearing assets, stating that any stablecoin intended as a "payment stablecoin" would be barred from offering programmatic interest or "rebates" to individual users. This move directly impacts projects like Ethena’s USDe and various Real-World Asset (RWA)-backed tokens. Lawmakers supporting the provision cite the need to prevent "shadow banking" risks and ensure stablecoins function primarily as a medium of exchange, not as speculative savings vehicles that circumvent traditional banking regulations.
The proposed act establishes a "Yield-Bearing Security" threshold, mandating that any digital asset offering a systematic return must register with the Securities and Exchange Commission (SEC) and comply with the disclosure standards of the Investment Company Act of 1940. This would legally prevent major issuers like Circle and Paxos from launching "Pro" versions of their stablecoins that share interest revenue with holders without undergoing a full public registration process.
In response to this regulatory threat, Figure (Nasdaq: FIGR), founded by entrepreneur Mike Cagney, is positioning its $YLDS token as a potential workaround. $YLDS is described as a registered public debt security on the Solana blockchain, intended to maintain a fixed dollar price while offering a "continuous yield" backed by U.S. Treasuries and Treasury repo agreements. Cagney announced on X that $YLDS will continue to pay interest and that he is actively lobbying for language in the CLARITY Act to ensure it receives "the same freedom of transfer as USDC." He has a meeting scheduled with the SEC next week to advocate for this inclusion.
Critics of the draft bill argue it grants a monopoly on yield to centralized financial institutions and could trigger a significant "yield migration" and "liquidity drain" from the U.S. digital asset sector. The $170 billion stablecoin market may shift toward offshore, non-compliant alternatives that still offer programmatic returns. The act also proposes a "Safe Harbor" allowing yield distribution exclusively to "Qualified Institutional Buyers" (QIBs), potentially widening the access gap between retail and institutional investors.
