The U.S. CLARITY Act appears poised to clear a major hurdle as lawmakers publish the final text addressing stablecoin yields. Coinbase chief legal officer Faryar Shirzad welcomed the development, saying it moves the industry closer to regulatory clarity after Senators Thom Tillis and Angela Alsobrooks released the last version aimed at settling a long-running dispute over whether stablecoin yields could undermine the competitiveness of the banking system.

In a post on X, Shirzad declared, “It’s time to get CLARITY done.” He noted that while banks won added restrictions on rewards, the measure preserves Americans’ ability to earn rewards tied to real usage of crypto platforms and networks. The draft text is framed around the SEC’s 404 provision, titled “Prohibiting interest and yield on payment stablecoins,” which would bar crypto firms from paying any form of interest or yield to holders of stablecoins simply for holding them.

Key takeaways

• The final CLARITY Act text targets stablecoin yields directly, prohibiting interest or yield on payment stablecoins while allowing rewards linked to genuine activity on crypto platforms.
• Industry voices are split: proponents argue the framework provides much-needed clarity, while some players worry banks will press for even tighter restrictions on rewards.
• Market sentiment around the bill has shifted, with prediction markets pricing in a roughly 55% chance of the act becoming law in 2026, up from earlier levels.
• Observers expect a Senate Banking Committee markup to occur imminently, potentially accelerating congressional action despite ongoing banking industry opposition.
• Key political signals point to active congressional momentum, with several lawmakers urging lawmakers to advance the bill without delay.

How the text reshapes stablecoin incentives

The crux of the draft revolves around a categorical ban on distributing interest or yield to stablecoin holders solely for holding the asset. The provision, labeled as SEC 404, would treat payments that resemble a bank deposit as prohibited, constraining the ability of stablecoin issuers and exchange-like platforms to offer high-yield incentives that could compete with traditional banks.

Still, the text carves out a pragmatic exception: rewards could be offered if they reflect bona fide activities. In practical terms, traders leveraging on-chain activity, transaction volume, or network usage could potentially receive rewards tied to real participation rather than passive holding. This nuance is seen as a balance between consumer incentives and financial stability considerations that banks have long argued could be undermined by yield-rich crypto products.

Industry voices have debated the nuance. Mert Mumtaz, CEO of Helius Labs, summed up a common sentiment: the policy would “clarify” the playing field by preventing risk-free yield on dollars without engaging a bank-like infrastructure. His comment reflects a broader concern among some crypto executives that the line between rewarding activity and yield-bearing mechanisms remains delicate and closely watched by policymakers.

From policy to markets: what investors should watch

Beyond the text itself, market participants are parsing the political and regulatory signals. The developer-facing question is whether the prohibition on yield will dampen the appeal of stablecoins as programmable money or merely push innovation toward activity-based rewards that fit within the new framework. For investors and builders, the distinction matters: a ruleset that favors transparency and objective usage data could reduce regulatory risk over time while still allowing meaningful consumer incentives aligned with platform usage.

Prediction markets reflected the evolving sentiment. Polymarket traders currently assign about a 55% probability that the CLARITY Act will be signed into law in 2026, reflecting a positive but not definitive trajectory. The market’s view underscores a broader expectation that, despite resistance from certain banking interests, the bill’s momentum could translate into legislative action within a reasonable horizon.

Industry leaders have begun calling for stronger legislative momentum. Coinbase CEO Brian Armstrong, weighing in on the development, urged lawmakers to “mark it up”—a shorthand for moving the bill through committee work and toward a floor vote. The push signals a preference within the industry for rapid progress, even as lawmakers assess the competing concerns raised by traditional banks about financial stability and competitive integrity.

Next steps: timing, opposition, and the markup window

Political forecasts suggest that the Senate Banking Committee could schedule a markup “imminently,” according to market observers closely tracking congressional timing. Alex Thorn, head of firmwide research at Galaxy Digital, noted that the release of the final text increases the likelihood that committee action could occur the week of May 11, while cautioning that opposition from banks is likely to intensify as the proposal moves forward.

The bill’s path remains intertwined with banking sector concerns. Thorn warned that banks could ramp up their opposition efforts if the framework gains momentum, potentially shaping amendments or tightening measures during the markup. The tension between crypto innovation and bank-focused risk controls remains a central dynamic in the bill’s journey through Congress.

On the political calendar, several lawmakers have signaled urgency. Senator Bernie Moreno has suggested he expects the CLARITY Act to be enacted by the end of May, while Senator Cynthia Lummis indicated the moment is now or never for major crypto legislation. These statements, paired with Tillis and Alsobrooks’ publication of the final text, position the CLARITY Act as a potential milestone in the broader effort to legalize and regulate the digital-asset sector in a comprehensive way.

As the process unfolds, observers will be watching for not only the markup but also the precise language surrounding “bona fide activities” and how regulators might interpret and enforce those provisions. The balance between incentivizing consumer participation and preventing risk-free yields remains at the heart of the debate, and the outcome could set a precedent for how the U.S. approaches other crypto-financial products in the future.

Why this matters for the crypto landscape

For investors and builders, the CLARITY Act represents more than a legislative milestone; it signals a potential framework in which stablecoins can operate under a clearer, more predictable set of rules. If the final law preserves the ability to offer activity-based rewards while eliminating pure yield for holders, it could create a path for ongoing innovation that aligns with prudential financial oversight. The emphasis on real usage data and on-chain activity as a basis for rewards could also encourage exchanges and wallet providers to strengthen transparency and compliance measures, potentially improving consumer protection and market integrity over time.

Still, the negotiations illustrate the ongoing tug-of-war between crypto innovation and traditional banking interests. Even with a favorable final text, the regulatory environment will likely continue to evolve, with future amendments, enforcement guidance, and potential state-level adaptations factoring into how firms design products and how users interact with stablecoins.

As the legislative clock ticks, market participants should monitor the markup schedule, any revisions to the bona fide activity criteria, and the broader political discourse around crypto regulation. The balance struck in this bill could shape the pace of stablecoin adoption, the feasibility of reward-driven user engagement, and the overall risk calculus that financial institutions apply to digital assets in the coming years.

Readers should stay attentive to further updates on the markup timeline, potential amendments, and the administration’s stance on crypto regulation as Congress weighs the CLARITY Act’s final form and its implications for the evolving crypto economy.

Solana-based DeFi yield protocol Carrot has announced a permanent shutdown after losses tied to the Drift Protocol exploit left it unable to continue operations.

According to a statement posted by Carrot on X on Thursday, the April 1 attack on Drift proved “catastrophic” for the protocol, forcing the team to wind down services and set May 14 as the deadline for users to withdraw remaining funds. The team said it will continue assisting recovery efforts linked to Drift and distribute assets once they are recovered.

“We are setting May 14th as the deadline to withdraw any remaining funds from Boost, Turbo, and CRT before we will then begin to deleverage the system. Your deposited funds are still yours, but all leverage will be reduced to zero, freeing up all liquidity for CRT redemption,” the team said.

Integrated with Drift’s infrastructure, Carrot relied on its liquidity pools to generate yield, which left it exposed when the exploit drained a large portion of Drift’s total value locked. DefiLlama data shows Carrot’s TVL fell from about $28 million before the incident to $1.99 million, a drop of roughly 93%.

Drift Protocol said on April 5 that the exploit followed months of preparation, during which attackers built trust with contributors through in-person meetings and online contact before delivering malicious tools. External estimates placed losses from the attack at about $280 million, while Drift described the campaign as organized and backed by significant resources.

According to Drift’s review, contact with the attackers began around October 2025, when individuals posing as members of a quantitative trading firm approached contributors at a crypto conference and later maintained relationships across multiple industry events. The exchange said those interactions allowed the group to gain trust before compromising devices and executing the exploit.

Drift added it has “medium-high confidence” that the same actors were involved in the October 2024 Radiant Capital breach, which resulted in about $58 million in losses and involved malware distributed through Telegram.

The impact has extended beyond Carrot. Projects connected to Drift, including Gauntlet, PrimeFi, and Elemental DeFi, have also reported disruptions following the exploit.

DefiLlama data shows that April recorded nearly $630 million in crypto losses across 25 incidents, making it the largest month for exploits since February 2025, when losses reached $1.47 billion. The $293 million attack on Kelp remains the biggest exploit of 2026 so far, followed by the Drift breach at roughly $285 million, with both incidents accounting for more than 90% of April’s total losses.

Brazil’s central bank has barred virtual assets from settlement inside regulated international payment rails. 

The rule applies to eFX services, which cover certain cross-border payments and transfers. Banco Central do Brasil published Resolution BCB No. 561 on Thursday. The measure updates rules for payment providers operating under the country’s foreign exchange framework.

The new rule says payments or receipts between an eFX provider and a foreign counterparty must use foreign exchange transactions. Providers may also use movement in a non-resident Brazilian real account.

The resolution bans the use of virtual assets for those payments and receipts. This means crypto and stablecoins cannot settle transactions inside the regulated eFX channel.

Rule is not a full crypto ban

The measure does not ban crypto transfers across Brazil. It only blocks crypto settlement within the supervised eFX framework.

Transitional rules also apply to firms not yet listed as approved eFX providers. These companies may continue operating if they seek central bank approval by May 31, 2027.

However, they must follow the same settlement rule. Their payments and receipts cannot use virtual assets.

Stablecoin activity draws closer review

Brazil has increased oversight of crypto-linked payment flows as stablecoin use grows. The central bank has been adding virtual assets to its financial and foreign exchange rulebook.

In November 2025, regulators set new rules for virtual asset service providers. These included authorization requirements and rules for crypto services tied to the foreign exchange market.

BCB Governor Gabriel Galipolo previously said crypto use had risen in Brazil over recent years. He said about 90% of flows were linked to stablecoins, raising concerns over taxation, money laundering, and backing.

The central bank has also reviewed stablecoins issued outside its supervision. In a technical note to Congress, it warned that such tokenscould face bans or strict conditions in Brazil.

The note said real-denominated stablecoins issued beyond BCB oversight may affect regulatory equality and monetary sovereignty. It also said foreign-currency stablecoins may raise concerns over capital flows and payment system fragmentation.

South Korea’s Seoul Administrative Court has granted Bithumb a temporary reprieve from a six-month suspension, allowing the exchange to continue operating while the case proceeds.

According to Yonhap News Agency, the court’s 2nd Administrative Division under Judge Gong Hyeon-jin approved the stay on Thursday, pausing enforcement of a sanction imposed by the Financial Intelligence Unit, an anti-money laundering body under the Financial Services Commission.

Regulators had issued the suspension notice in March, stating that Bithumb failed to meet AML obligations that required proper identity verification of users. The penalty targeted new customers by restricting external crypto deposits and withdrawals, a move that would have limited onboarding activity if enforced.

The Financial Intelligence Unit also imposed a fine of 36.8 billion won, about $25 million, after identifying roughly 6.65 million cases where user identities were not properly verified, according to The Korea Herald. Disciplinary measures were also directed at CEO Lee Jae-won as part of the same action.

Court filings show Bithumb challenged both the suspension and its execution, submitting a lawsuit and a stay request on March 23. Enforcement had already been paused during judicial review, and the latest decision keeps restrictions on hold until a final ruling is issued, leaving day-to-day operations unaffected for now.

Company statements cited by Yonhap indicated that the suspension could slow new user growth and weigh on business activity, while the FIU maintained that any revenue impact would be limited. Payment of the fine remains pending more than four weeks after the deadline, despite a 20% early settlement discount offered by the regulator, The Korea Herald reported.

“We plan to faithfully present our position throughout the remaining legal proceedings,” Bithumb said, according to local media reports.

Regulatory pressure deepens after operational missteps

Regulatory scrutiny has intensified following a series of operational issues, including a February payout error that triggered investigations into internal controls. During a promotional campaign, the exchange mistakenly distributed a theoretical 620,000 BTC instead of 620,000 won, an error that led to unintended credits reaching external wallets.

According to local outlet Chosun Biz, Bithumb recovered about 99.7% of the assets, while the remaining portion was addressed using company reserves after some users sold the funds. Legal action has since been initiated against certain users who refused to return the assets, with provisional seizure requests filed to freeze holdings ahead of civil proceedings.

Authorities responded to the incident by tightening oversight across the sector. The Financial Services Commission directed exchanges to strengthen real-time monitoring of large transactions after an emergency inspection identified vulnerabilities in automated settlement systems.

Alongside the regulatory challenges, Bithumb has pushed its planned initial public offering timeline to 2028, citing ongoing scrutiny, while investigations by the Financial Supervisory Service continue to examine risk management practices tied to the payout error.

Bitcoin funding rates stayed negative for 46 days, the longest since 2023, forcing shorts to pay longs daily.

Bitcoin shorts didn’t just lose money when the squeeze hit; they had been losing money long before it arrived. 

For 46 consecutive days, funding rates stayed negative, forcing short traders to pay longs simply to hold their positions. 

According to CoinDesk, that stretch marked the longest negative funding period since 2023. When Strategy’s $2.54 billion purchase and Trump’s Iran ceasefire extension finally landed, the damage was already done. The catalysts were just the final blow. 

Negative funding rates made holding Bitcoin shorts expensive

Funding rates are periodic payments exchanged between long and short traders in perpetual futures markets. When rates turn negative, shorts pay longs to keep positions open. That cost runs on a clock, not a chart.

As Leverage.Trading outlines in its breakdown of funding rates, at 20x leverage, a 0.05 percent funding charge on notional exposure equals one percent of available margin per settlement. 

With three settlements occurring daily, that figure compounds fast. Leverage. Trading’s educational breakdown of funding mechanics lays out exactly how quickly those charges erode a position.

Over 46 days, that steady drain ate through an estimated 30 to 40 percent of the short margin before any major catalyst appeared. Directionally wrong traders were also paying for the privilege of staying wrong, every single day.

Shorts were already near liquidation before the news hit

By the time April’s headlines arrived, short positions were operating on a thin margin. Strategy announced the purchase of 34,164 BTC for $2.54 billion, sending Bitcoin climbing to $77,500, per CoinDesk. 

Trump’s Iran ceasefire extension added further risk appetite to the session. Both events hit close together.

The market didn’t need much upward pressure to trigger liquidations at that point. Margin had already been quietly stripped away over six weeks of negative funding. 

What looked like a sudden squeeze from the outside was actually the final stage of a much slower process.

Anton Palovaara of Leverage.Trading described it directly: 

“Forty-six days of negative funding doesn’t show up on a chart, but it shows up in your margin. By the time the ceasefire news hit, a lot of shorts were already running on fumes.” 

They added,

“The liquidations happened fast because the margin was already gone. The headline was just the match.”

Over $427 million in shorts liquidated as margin ran out

Finance Magnates reported more than $427 million in short liquidations across recent sessions. That number reflects how much trapped leverage had accumulated during the extended negative funding window. 

Shorts had been positioned for a price drop that kept not materializing.

On April 24, crypto trader CryptoBoss posted a breakdown connecting the setup to historical precedents. He noted that 50 days of deeply negative funding near the $15,500 bottom in 2022 preceded a 48 percent rally to $23,000. 

A similar pattern played out during the 2021 China mining ban, where roughly 45 days of negative funding near $29,000 preceded a rally to $48,000.

The 2025 setup matched those conditions closely, with 46 days of negative funding while price ground steadily higher, not lower.

Coinbase premium and the $80k test signal: What comes next?

Alongside the liquidations, Coinbase Premium posted its longest bullish streak since October’s $126,000 high, per CoinDesk. 

That streak pointed to consistent spot buying pressure from U.S.-based investors running parallel to the derivatives squeeze. Spot demand and a short-saturated futures market rarely stay in tension for long.

Finance Magnates noted that Bitcoin is now testing the $80,000 breakout level. 

Whether that level holds depends on continued spot support and how remaining leveraged shorts respond. Positions that survived the squeeze are still carrying funding risk if rates stay elevated.

The 46-day bleed was not visible on most price charts. However, it showed up clearly in margin balances, and ultimately in the liquidation data that followed.

Strategy’s CEO has promoted its high-yield STRC stock as a way to cover personal expenses, drawing attention to the risks tied to its dividend structure.

According to comments made by Phong Le on Natalie Brunell’s show, the executive described STRC as an income-generating asset that could help investors manage recurring costs such as mortgages, utility bills, and car payments. He said the stock’s variable dividends “almost looks like a paycheck,” while noting that payments arrive regularly.

Le disclosed that he had personally purchased $250,000 worth of STRC, explaining the decision through his own financial setup. He said he holds a 1.75% 30-year mortgage and viewed STRC’s current 11.5% annualized dividend as a way to earn a higher return instead of paying down that debt. He described the approach as earning income from the spread between the dividend yield and his borrowing cost.

Details published by Strategy on its STRC information page state that cash dividends are not guaranteed, while the company’s board retains the authority to suspend payments and adjust the dividend rate at any time. The same disclosures also note that the stock carries no assurance of principal repayment.

During the same appearance, Le compared the consistency of STRC payouts to a salary, although the company’s own documentation outlines conditions under which those payments can be reduced or halted.

Le also addressed the composition of STRC’s investor base, stating that roughly 80% of holders are retail participants. His remarks framed these investors as individuals managing everyday financial obligations, including mortgages and bills, placing them among the primary users of the product he described.

The discussion has drawn parallels to earlier remarks by Michael Saylor, who in March 2021 encouraged the use of leverage, including mortgages, to acquire Bitcoin. Unlike those comments, Le’s remarks focused on STRC rather than bitcoin, positioning the company’s own stock as a yield-based alternative.

In the same interview, Le also said STRC “grew faster than the iPhone,” referring to the pace of stock sales. Standard accounting definitions, however, distinguish capital raised through stock issuance from revenue generated through the sale of goods or services.

Compensation disclosures cited in public filings show that Le’s annual pay has exceeded $15 million, placing his personal investment example in a different financial context than the retail investors he described.

The crypto market rose around 1.2% on Friday, with total market capitalization ticking higher as a wave of short liquidations and stronger tech-led risk sentiment lifted prices despite persistent geopolitical tensions.

Bitcoin (BTC) climbed roughly 1.5% to trade near the $77,000 level after rebounding from recent lows, while Ethereum (ETH) gained about 1% to hover around $2,200. Major altcoins such as XRP (XRP), BNB (BNB), and Solana (SOL) also moved higher by 1–2%, reflecting a broader recovery across the market.

The move higher was largely driven by a short squeeze in derivatives markets. More than $150 million in crypto positions were liquidated over the past 24 hours, with roughly 70% of those tied to short positions. The forced unwinding of bearish bets added upward pressure as traders rushed to cover positions.

The rebound comes even as geopolitical risks remain elevated, particularly around the U.S.–Iran standoff.

Iran’s President Masoud Pezeshkian said the U.S. naval presence near Iranian ports amounts to an “extension of military operations,” calling it “intolerable.” U.S. President Donald Trump added that Washington “might need” to restart military action, while offering limited transparency on the status of negotiations.

Despite these developments, markets showed signs of resilience, suggesting that much of the geopolitical risk may already be priced in for now. Oil prices remained elevated but steadied after recent volatility linked to the Strait of Hormuz tensions. Brent crude held near the $110–$111 per barrel range, while WTI crude traded just below that level, easing slightly from recent spikes that had raised fears of supply disruptions.

At the same time, safe-haven assets softened. Gold slipped over 1% during the session, while silver also declined, indicating a partial rotation back into risk assets. This shift provided additional support to crypto markets.

Alphabet Inc. rally lifts tech and crypto-linked equities

Broader market sentiment improved sharply after Alphabet Inc. shares surged roughly 10% following stronger-than-expected earnings driven by its cloud and AI segments. The move added hundreds of billions of dollars in market value and lifted global tech stocks.

The rally extended into Asian markets, where tech-heavy indices such as the Nikkei 225 moved higher, reinforcing a risk-on tone across asset classes.

Crypto-linked equities also tracked the move. Shares of Coinbase and MicroStrategy rose alongside Bitcoin’s recovery, reflecting renewed investor appetite for digital asset exposure. Mining stocks also saw gains as improving prices and sentiment supported the sector.

While the latest move points to improving near-term sentiment, analysts note that crypto markets remain highly sensitive to further developments in U.S.–Iran tensions, oil price movements, and shifts in global liquidity conditions.

TLDR:

• Stablecoin supply has surpassed $300B as banks and payment firms begin direct integration into financial systems.
  
• B2B transfers account for $226B of real usage, making it the largest and fastest-growing stablecoin category today.
  
• Real-economy usage sits at just $390B of $35T in annual volume, showing how early adoption still is globally.
  
• Asia, led by Singapore, Hong Kong, and Japan, is outpacing the West in practical, real-world stablecoin deployment.

Stablecoins are gradually moving beyond crypto-native activity into mainstream financial infrastructure worldwide.

Supply has already exceeded $300 billion, while banks and payment companies pursue direct integration. Regulatory frameworks are becoming clearer across major markets at the same time.

Annual transaction volume sits around $35 trillion, yet real-economy usage remains roughly $390 billion. That figure represents barely over 1% of total activity. The infrastructure is being built well before broader adoption fully arrives.

B2B Payments Emerge as the Clearest Use Case for Stablecoins

Stablecoins are finding their strongest real-world application in business-to-business payments today. Cross-border transfers remain slow, expensive, and full of friction for many companies.

Settlement often takes days, while liquidity regularly gets locked in transit. Smaller businesses tend to face far worse banking conditions than large institutions.

Around $226 billion of real usage comes from company-to-company transfers today. This makes B2B the largest real-economy stablecoin category by a clear margin.

That figure is growing quickly because the problem it addresses is well understood. Fewer intermediaries and 24/7 settlement rails deliver measurable savings for businesses.

As analyst @WorldOfMercek noted, traditional finance and blockchain rails are “no longer moving in completely separate worlds.” Banks are actively adopting crypto infrastructure because the operational benefits are hard to dismiss.

The old “crypto versus banks” narrative has given way to steady convergence. Financial institutions are integrating stablecoin rails for practical, well-documented economic reasons.

Most of the $35 trillion in annual volume still comes from trading, DeFi, and exchange settlement. Real-economy usage at $390 billion remains just over 1% of that total. Rails are always built before populations fully transition to using them.

Asia Leads Real Usage While Integration Remains the Biggest Barrier

Geographic data shows that Asia is ahead of the West in practical stablecoin use. Singapore, Hong Kong, and Japan account for a large share of real-world transactions.

Western markets spend more time discussing potential than actively deploying stablecoins at scale. Asia is already applying them where they directly solve payment and business problems.

Retail usage is growing, though it remains a smaller portion of the overall market. Consumer payments and daily card spending are not the leading story just yet.

That category will likely expand once rails integrate more deeply into existing payment systems. Most users care about speed, cost, and reliability — not which infrastructure moves their money.

The actual bottleneck today is not the technology — it already works. Bank connectivity, payment network access, regulatory clarity, and institutional trust are the real gaps remaining. Those barriers are narrowing as more traditional players enter the space.

Stablecoins are not displacing the financial system on any rapid timeline. Instead, they are being absorbed into it consistently and quietly over time.

That process tends to look slow until it suddenly feels inevitable to outside observers. The most consequential chapter of the stablecoin story is likely still ahead.