In today’s CLARITY Act news, the U.S. Senate Banking Committee released the full 309-page text of the CLARITY Act just after midnight on May 11, 2026, ahead of a committee hearing on Thursday, and for the first time, stablecoin holders can see exactly what rules Washington wants to impose on the coins they use every day. The bill is far from law, but the draft text is the clearest signal yet of where U.S. crypto regulation is headed, and several provisions will directly affect the practical operation of stablecoins like USDC.
Think of the CLARITY Act as a building code for a neighborhood that has built skyscrapers without having one. Stablecoins have become a multi-hundred-billion-dollar market, with virtually no federal rules governing who can issue them, what they must hold in reserve, or what happens to your funds if the issuer collapses.
This bill, advanced by the Senate Banking Committee, assigns oversight responsibilities to federal and state regulators, codifies reserve requirements and sets a hard line under which stablecoin products are legal.
The detail missing from most headlines is that the bill still needs to clear significant political hurdles — including a 60-vote threshold in the Senate and an unresolved ethics fight over President Trump’s crypto holdings — before any of these rules take effect.
BREAKING: Clarity Act bill unveiled by US Senate Banking Committee ahead of hearing.
The new 309-page text of the stablecoin bill prohibits issuers from paying interest or yields simply for holding stablecoins.
The bill prohibits any return “economically… pic.twitter.com/R93jO3tI1J
– Bull Theory (@BullTheoryio) May 12, 2026
CLARITY Act News: The 5 Stablecoin Rules from the Committee Meeting Every Investor Needs to Understand
Rule 1: 1:1 liquidity reserve mandate
Stablecoin issuers must back each token with an equivalent amount of high-quality liquid assets, such as U.S. Treasury bills and cash held in segregated accounts. This ensures that if you hold $1,000 in a stablecoin, the issuer has $1,000 set aside, limiting counterparty risk.
Rule 2: Algorithmic Stablecoins Are Effectively Banned – For Now
New algorithmic stablecoins like Terra are banned for two years while a GAO study assesses their risks. This means that any new algorithmic models in the United States will face legal challenges until at least 2028.
Rule 3: A dual surveillance structure – state and federal
The CLARITY Act allows state-chartered trust companies to issue stablecoins in accordance with federal standards, while large non-bank issuers are subject to Federal Reserve regulation. This creates a balance between monitoring and compliance costs.
Rule 4: Stablecoin yield is limited – but not eliminated
The bill restricts yield payments on stablecoins to avoid competition with bank interest products, but structured rewards for holding stablecoins remain possible. The American Bankers Association is seeking to further tighten these limits.
Rule 5: Redemption rights are codified
Stablecoin holders are guaranteed the right to exchange tokens for US dollars at face value, usually within one business day. This legal guarantee reinforces liability beyond the discretionary power of the issuer.
EXCLUSIVE: 99Bitcoin Readers – Earn $10 USDC when you sign up for Binance
What this means for the stablecoin market
(SOURCE: CoinGecko)
Furthermore, the primary beneficiary of regulatory clarity is Circle, the issuer of USDC, which closely aligns with the CLARITY Act compliance model. Galaxy Research recently reported that billions of dollars of foreign capital are expected to enter the US financial system via stablecoins, with much of the growth coming from offshore markets, suggesting that US regulations will influence global adoption.
Tether, with its USDT leading global stablecoin volume, is facing increasing pressure due to its less transparent reserve model, raising important questions about its regulatory compliance.
Three scenarios to watch as the bill progresses:
Case of the bull: The committee votes Thursday, merges with the Senate Agriculture Committee’s version by July, and crosses the 60-vote threshold in early August, allowing institutional capital to flow into compliant stablecoins.
Reference case: The bill is adopted in committee but blocks the ethical provisions, postponing final adoption to the end of 2026 or the beginning of 2027 while the markets remain in regulatory limbo but with clearer signals.
Bear case: An ethical dispute, particularly over alleged conflicts of interest, led to the bill’s failure to gain bipartisan support, returning regulation to slower regulation at the agency level.
Overall, the crypto industry’s response to the CLARITY Act news has been positive, signaling a desire to pass bipartisan legislation. The upcoming Senate Banking Committee hearings will be crucial to follow up on the amendments, especially those related to stable coin yield and ethics provisions.
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The CLARITY Act News article: the long-awaited 309-page text is published this evening: what next? appeared first on 99Bitcoins.
