On Monday morning, May 4, 2026, Bitcoin broke through the US$80,000 barrier for the first time. Coinbase shares jumped 7% before noon, Circle's shares 15%. For those who only read the headline, it seemed like just another speculative rotation. For those who followed the regulatory calendar over the past ninety days, it was obvious: the market was pricing in a bill text that had been released three days earlier — Friday, May 1st — and which unlocked in hours the oldest stalemate of the CLARITY Act.
The text carries two names in the signature: Thom Tillis (R-NC) and Angela Alsobrooks (D-MD). And a side effect that has not yet been fully absorbed by the sector: the compromise reclassifies stablecoin from quasi-bank deposit to payment rail. The "buy and hold to earn interest" model died on paper. The "buy and use to earn rewards for usage" model survived. This is the thesis that ON3X had been sustaining for weeks — the game shifted from stock to flow — turning into real-time regulation.
The knot that locked CLARITY for months
When we published in April that the Senate had only 14 working days to unlock the markup before the midterms calendar killed the project, the knot was already identified: stablecoin yield. The friction point was not whether stablecoin would exist under federal regulation — that was already settled by the framework of the original CLARITY proposal. The point was different: can issuers and exchanges pass returns on idle stablecoin balances?
The crypto sector wanted yes — under the thesis that remuneration would compete with the low returns of traditional bank deposits. The banking lobby wanted no — under the thesis that returns on stablecoin is, in practice, disguised deposit-gathering that drains bank deposits, shrinks the credit base and disorganizes the financial system. Both sides locked up voting for three months. Tim Scott, chairman of the Senate Banking Committee, described the situation last week with a single phrase: "we're in the red zone" — an expression taken from American football for when the game is just a few yards from a touchdown and any mistake costs the point.
What the text actually says
The wording of the compromise is surgical. It is prohibited to pay "yield or interest" on stablecoin balances "that is the functional or economic equivalent" of remuneration on bank deposits. It is permitted to pay rewards linked to "bona fide activities or bona fide transactions" — legitimate activities and transactions — different from interest generated by remunerated deposits.
In practical language, the boundary looks like this:
- Permitted: cashback on real transactions, loyalty rewards tied to platform use, staking bonuses or participation in decentralized networks, rewards linked to payment volume, incentive programs for commercial integration.
- Prohibited: automatic interest on idle balances, standard returns on stablecoin without any usage counterpart, any structure economically equivalent to a remunerated savings account.
Tillis publicly defended the design with the phrase: "We have worked in good faith with all sides throughout this process to encourage compromise and to avoid letting the perfect become the enemy of the good". Cynthia Lummis (R-WY), who followed the negotiations, was more direct: "This finalized, bipartisan text is the culmination of months of hard work to deliver a compromise on yield we can all live with". Within hours, Coinbase and Circle endorsed the agreement and pressured the Banking Committee to advance the markup immediately.
Buy and Use: the model that survived
The technical consequence of the text is a complete reframing of the role of stablecoin on the balance sheet of whoever issues, distributes or processes it. Under the previous rule — informally followed by American exchanges — stablecoin was treated as a hybrid product: medium of exchange for transactional use and passive remuneration instrument for users who merely held the balance. The Tillis-Alsobrooks compromise cuts this ambiguity. Under the new design, stablecoin is a payment rail. Period. Whoever wants remuneration needs to deliver usage.
Coinbase, which partially depended on yield on USDC balances as a competitive differentiator during low-volume trading periods, will have to reformat its rewards program — and the company's leadership has already signaled exactly that by speaking of "preserving the ability for Americans to earn rewards, based on real usage of crypto platforms". Circle keeps its roadmap practically intact, given that its central revenue comes from returns on reserves, not from passing it on to the end user. Visa, which processed US$7 billion in settlement in stablecoin across 9 blockchains, comes out unscathed: settlement is usage by definition, not disguised deposit-gathering.
It is exactly the point we defended when we published the analysis on the yield wars among Top 10 stablecoins: the competitive game is no longer in who offers the highest APY on idle balance — it's in who integrates most deeply into payroll, loyalty programs, institutional settlement and corporate payment infrastructure. The CLARITY text now codifies this migration.
Who lost: five banks and the first round
The banking lobby did not receive the result in silence. The five major banking associations in the United States — American Bankers Association (ABA), Bank Policy Institute (BPI), Consumer Bankers Association (CCA), Financial Services Forum (FSF) and Independent Community Bankers of America (ICBA) — issued a joint statement hours after the text was released. The central argument, in direct quote: "The proposed language falls short of that goal. Research demonstrates that yield-earning stablecoins could reduce all consumer, small-business, and farm loans by one-fifth or more".
The technical reading of the five entities is defensible: if the boundary between "functional equivalent" and "activity-based reward" is not precisely drawn in the sub-regulatory framework, the crypto sector may find loopholes to reintroduce yield in fact under the guise of "network participation reward". But the political reading is also defensible by the other side: the banking lobby has structural incentive to paint any deposit competition as a systemic threat, even when the amount of potentially migratory funds is a low fraction of the American bank balance.
The scoreboard of the first round is clear: banks lost. But the game is not over. The sub-regulatory implementation of CLARITY — what will be considered "economic equivalent", who oversees it, which reports are required — will go through CFPB, OCC and SEC. That's where the banking lobby will attack again. Anyone who watched the Dodd-Frank rollout in 2010 knows that the law text is less than half the battle; the other half lives in guidelines, enforcement priorities, no-action letters. Round two begins in June.
The market has already priced it in
The price movement on May 4th deserves technical analysis. Bitcoin did not break US$80,000 in a vacuum: it arrived at the level accumulating 19% gains for the month against approximately 10% for the S&P 500 in the same period. Coinbase and Circle reacted with even more strength — 7% and 15% respectively — signaling that the market reads the compromise as institutional unlocking, not noise.
QCP, a digital analysis firm, captured the point in one sentence: the rally "suggests the market may be drawing strength from a wider base of support beyond that single narrative" — the momentum comes from a broader base than just the CLARITY narrative. Bitcoin rose even as Michael Saylor's Strategy slowed purchases, which historically would have dampened the spot. There is a caveat: large positions in call options at US$80,000 may act as technical "electric fence", containing immediate gains. But the metric that matters is not the price of a Monday — it's the implied probability of enactment. Polymarket locked in 70% for passage of the CLARITY Act still in 2026 soon after the compromise announcement. Before the announcement, the same metric oscillated between 40% and 50%.
The calendar that remains
The Banking Committee should do the markup in mid-May. Tim Scott projects a Senate floor vote between June and July. House of Representatives in sequence, given that the lower house text is already partially aligned. Enactment, in the most optimistic scenario, before the August recess. Tight window — exactly what we alerted to when only 14 working days remained — but now with the central knot cut. The real risk is no longer regulatory. It's political: how much the November midterms calendar will consume of the legislative space.
The Brazilian contrast: two antagonistic models
While the United States codifies stablecoin as a payment rail, Brazil went in the opposite direction. The Resolution 521 from the Brazilian Central Bank, activated exactly on May 4th — the same day Bitcoin broke through US$80,000 — equates crypto asset movements to currency exchange operations. Resolution 561, earlier, had already prohibited the use of crypto in international payments under the eFX framework. These are two antagonistic regulatory models.
The American model: stablecoin as payment infrastructure, with remuneration tolerated only in exchange for usage. The Brazilian model: stablecoin as a currency exchange instrument, with total currency exchange oversight and blocking on international payment routes. The practical consequence for Brazilian companies is severe. A fintech wanting to operate in the United States can structure a loyalty program paid in stablecoin with cashback on real usage — a model permitted by CLARITY. The same fintech, in Brazil, operates under the currency lens: each movement must be reported as a currency exchange operation, with purpose, counterparty and country identified. B3 navigates precisely this gap by designing a domestic stablecoin that operates within the perimeter of the national financial system, without crossing the regulatory border.
The risk that emerges is pure regulatory arbitrage. Brazilian companies with international operations will structure their stablecoin legs in jurisdictions that have codified the "buy and use" model — United States post-CLARITY, Europe post-MiCA, Singapore, Hong Kong, United Arab Emirates, Japan. Brazil, by treating stablecoin as currency exchange, exports activity. It is predictable that the CVM will in a second move try to tailor exceptions for internal use cases — but the legislative window is tight, and the tailoring will have to negotiate with the current currency design without tearing up Resolution 521.
The ON3X perspective
Three readings to metabolize what happened between May 1st and 4th:
- Disguised yield died globally, not just in the United States. When the American regulator codifies a specific boundary between "yield equivalent to deposits" and "rewards for usage", the European Union, United Kingdom, Singapore and Hong Kong tend to replicate the division through regulatory convergence. Brazil, under Resolution 521, is already in an even more restrictive model — currency exchange. The consequence: global stablecoin issuers will have to choose, over the next twelve months, which product model will survive the sub-regulatory implementation of each jurisdiction. Whoever designed the product around yield on idle balance needs to reformat now, not in 2027.
- Banks lost the first round, but the second is invisible. The CLARITY wording codifies principles. The sub-regulatory implementation — which will come from CFPB, OCC, SEC and federal bank regulators — will define, in practice, what "economic equivalent" is. That's where the banking lobby will attack again, and with more effectiveness: technical rules are debated in committee hearings, public comments, docket rounds. The crypto sector that celebrated this week needs to be equally present in those rounds, or the text's gains evaporate in implementation.
- Brazil needs to decide, with a short political window, between two worlds. Resolution 521 activated on May 4th took one side — currency exchange. The Brazilian business sector that operates with stablecoin in payroll, B2B international payments or loyalty will pressure against the currency exchange model over the next six months. If the Brazilian regulator backs down and opens exceptions for "domestic transactional use", it enters convergence route with the American model. If it maintains the current full treatment, it exports economic activity to more permissive jurisdictions. There is no third way. And the decision needs to come out before the American sub-regulatory implementation closes the CLARITY design — because from that moment on, the cost of divergence rises exponentially.
Frequently asked questions
What is the Tillis-Alsobrooks compromise?
It is the wording text published on May 1st, 2026 by Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD), which unlocks the central stalemate of the CLARITY Act on yield in stablecoins. The text prohibits the payment of returns that are "functional or economically equivalent" to interest on bank deposits, but permits rewards linked to legitimate platform use, such as cashback, loyalty and transaction bonuses.
Is yield on stablecoin still allowed in the United States?
Only in formats linked to real usage. The "buy and hold to earn automatic interest" model is expressly prohibited. Rewards programs based on transaction volume, commercial integration, staking or participation in decentralized networks remain permitted under the compromise design.
Does Coinbase's rewards program continue?
It continues, but will need to be reformatted. Coinbase has already signaled publicly that it will migrate its design from "buy and hold" to "buy and use" — rewards tied to real transactions and active participation, not idle USDC balance. Circle, Visa and other institutional settlement infrastructures remain unaffected, given that their models are already usage-based.
When does the CLARITY Act actually take effect?
The projected schedule is: markup in the Senate Banking Committee in mid-May, Senate floor vote between June and July, House vote in sequence. Enactment, in the most optimistic scenario, before the August recess. Polymarket prices 70% probability of approval still in 2026. After enactment, sub-regulatory implementation by CFPB, OCC and SEC still requires months.
How does the compromise affect Brazil?
The American compromise creates regulatory mismatch with the Brazilian design. Resolution 521 from the Central Bank, activated exactly on May 4th, equates stablecoin to currency exchange operations, with total oversight. The American model treats stablecoin as a payment rail. The practical result is incentive for regulatory arbitrage: Brazilian companies with international operations tend to structure their stablecoin legs in jurisdictions that adopted the "buy and use" model, pressuring the Brazilian regulator to open exceptions over the next six to twelve months.