Who gets the yield? CLARITY Act becomes fight over onchain dollars

The exponential growth of dollar-pegged stablecoins has catalyzed a crucial legislative debate regarding the distribution of seigniorage—the profit generated by the difference between the nominal value of currency and its cost of issuance. In the current high-interest rate environment, the yield generated by the backing assets (primarily U.S. Treasury bills) of major stablecoins now amounts to billions of dollars annually, and the proposed CLARITY Act has transformed this profit pool into a regulatory battleground.

**The Economics of Stablecoin Yield Capture**

Currently, stablecoin issuers operate similarly to money market funds but capture the interest rate differential entirely, offering users a zero-yield asset while benefiting from the high-quality reserves. This system creates significant centralized profit centers (often termed ‘monetary rents’) within an otherwise decentralized ecosystem. As stablecoin reserves surpass significant milestones, policymakers have recognized this lucrative economic structure and are now debating whether these profits constitute unfair enrichment or necessary capital for operational safety and growth.

**The CLARITY Act’s Intervention**

The hypothetical CLARITY Act (Consumer Liquidity and Asset Regulatory Integrity) aims to define a comprehensive regulatory framework for payment stablecoins. While sections focusing on reserve quality and auditing have broad support, the most contentious elements revolve around yield distribution. Regulators are primarily exploring three pathways:

1. **Taxation/Fee Contribution:** Mandating issuers to pay a percentage of their yield into a government-managed stability fund to cover potential systemic risk.
2. **Mandatory Yield Sharing:** Requiring issuers to pass a portion of the generated interest directly to the stablecoin holders, fundamentally changing the product from a utility to a yield-bearing asset.
3. **Reserve Requirements vs. Profit:** Strict rules that mandate higher liquidity cushions, effectively reducing the capital available for yield generation but increasing consumer safety.

**Stakeholder Conflict and Consequences**

Stablecoin operators argue that full yield capture is essential to cover significant compliance costs, maintain robust technological infrastructure, and build the necessary capital buffers to absorb market shocks without relying on taxpayer bailouts. They warn that mandated yield sharing would reduce their ability to compete globally and stifle innovation.

Conversely, consumer advocacy groups and specific segments of the Decentralized Finance (DeFi) community argue that since stablecoin users bear the counterparty risk of the issuer, they should be entitled to the interest earned on the underlying assets, characterizing the yield as a form of socialized benefit rather than private corporate profit.

**Outlook**

The resolution of the CLARITY Act will fundamentally redefine the financial model of the stablecoin market. If regulators succeed in redirecting a significant portion of the yield—either to the state or to the users—it would compress issuer margins dramatically, shifting the stablecoin landscape from a high-profit utility to a tightly controlled, lower-margin financial product. This regulatory decision is central to determining who ultimately benefits from the proliferation of ‘onchain dollars’ in the global economy.

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