3-Week Countdown Begins For CLARITY Act: Coinbase Research Head

David Duong, Global Head of Research at Coinbase, has laid out the current state of the CLARITY Act negotiations, identifying a narrow three-week window to resolve the contentious stablecoin rewards language that continues to stall the bill’s progress through the U.S. Senate.

In a post on X dated March 27, Duong noted that the CLARITY Act has come back into sharp focus this week as stablecoin rewards once again emerged as the central sticking point.

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He referenced the March 20 announcement from Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) confirming that the Senate Banking Committee had reached an agreement in principle intended to unblock the legislation.

Latest framework bans passive yield, permits activity-based rewards

However, the situation shifted on March 24 when the latest proposed framework was revealed. According to Duong, the new text would ban yield paid solely on passive stablecoin balances while permitting a narrower set of activity-based rewards tied to payments or platform usage. He described the move as an effort to address banking industry concerns about deposit flight without entirely shutting down innovation in stablecoin products.

The framework aligns with what has been widely reported in recent weeks — traditional banks, represented by the American Bankers Association, have argued that yield-bearing stablecoins function as unregulated deposit accounts and could pull billions from the banking system. Estimates from industry analysts suggest stablecoins could divert up to $500 billion in bank deposits by 2028 if left unchecked.

Crypto industry mounting Coordinated Counterproposal

Duong revealed that crypto industry leaders are currently working on a coordinated counterproposal aimed at explaining why targeted changes are needed to protect customers and preserve sustainable rewards programs. While he did not name specific companies involved, Coinbase itself has been at the center of the stablecoin yield debate since withdrawing its support for the bill in January, when early amendments restricted reward provisions.

Stablecoin-related revenue accounted for roughly 20% of Coinbase’s total revenue in Q3 2025, driven largely by its distribution agreement with Circle on USDC reserves. Any restriction on stablecoin rewards could directly impact one of the exchange’s highest-margin revenue streams.

Multiple open issues beyond stablecoin yield

Beyond stablecoin rewards, Duong flagged other unresolved matters that need to be addressed in the same timeframe. These include designing a workable SEC “front door” — a reference to how digital asset issuers would interact with the securities regulator — and preserving the SEC’s exemptive authority. Both provisions have drawn attention from lawmakers looking to maintain regulatory flexibility while establishing a clear framework for the crypto industry.

The base case, according to Duong, is that all of these issues are resolved in the next three weeks so that the Senate Banking Committee can hold a markup in the second half of April, paving the way for potential final passage as early as May if floor time allows.

Timeline pressure remains intense

The timeline remains extremely tight. As previously reported, Senator Bernie Moreno has warned that if the bill does not reach the full Senate floor by May, digital asset legislation may not advance again before midterm election dynamics make major votes politically unfeasible. Galaxy Research Head Alex Thorn has echoed similar concerns, noting that delays at the committee stage would effectively kill the bill for this Congressional session.

Polymarket odds for the CLARITY Act’s passage in 2026 currently sit around 68%, up from a low of 45% in late February after the stablecoin yield talks appeared to break down. The recent Tillis-Alsobrooks agreement in principle and the scheduled stakeholder review meetings have helped restore some market confidence, but the final legislative text remains unseen by the broader industry.

Also Read: RippleCEO Stays Neutral on Clarity Act, Predicts May Passage