<div id="readability-page-1"><div><div><p>Authors: Ekko An, Ryan Yoon; Source: Tiger Research; Compiled by: Shaw, Jinse Finance</p><h2>Key Takeaways</h2><ul><li>The debate over stablecoin yields has been settled with a bipartisan compromise: a ban on static interest on holdings and a allowance for behavioral incentives, officially clearing the biggest legislative obstacle in the industry.</li><li>The Senate Banking Committee voting process has been completed; the final window for legislation is before the August congressional recess, with the executive branch exerting pressure to complete the signing before July 4th, and the bill is expected to be officially passed unanimously in July.</li><li></li><li>Core terms for implementation: Prohibition of issuing indirect static holding interest; Allowance of incentive income generated from actual business activities such as trading and payment; Setting an upper limit on the issuance of unregistered tokens, permitted within compliance limits; Establishing a legal safe harbor by redefining securities attributes; Fully decentralized DeFi protocols are exempt from SEC regulation.</li><li>Impact on business models: The industry is shifting towards behavior-based retention incentive mechanisms, alleviating capital outflow; A token investment banking ecosystem is emerging, encompassing investment advisory services, investor matching, and issuance-side SaaS services, forming a new sub-sector.</li><li>2026: The industry officially bids farewell to the disorderly development stage and enters an era of institutional standardization, with regulators around the world aligning with the new US regulations. The industry presents a two-way pattern: Institutional funds promote the large-scale popularization of the industry, while increased compliance costs slow down the pace of early-stage startup innovation.</li><li></li></ul><h2>I. Why the CLARITY Act Stalled</h2><p>The core purpose of the CLARITY Act is to clarify the regulatory responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in legal form. The crux of the issue that delayed the bill's progress by four months was a single clause: a ban on interest payments on stablecoins.</p><p>The core point of contention between the two sides is whether platforms can continue to pay stablecoin holders annualized interest rates of 4% to 5%.<strong>The banking industry, concerned about preventing the outflow of bank deposits, advocates a complete ban on interest payments on stablecoins; the crypto industry strongly opposes this, believing that it will directly impact the industry's core profit model.</strong> Previously, Coinbase firmly opposed a complete ban on interest payments, causing related negotiations to stall until May. On May 1st, Republican Senator Thom Tillis and Democratic Senator Angela Albrooks jointly introduced a bipartisan compromise: prohibiting interest-bearing on purely static holdings, while allowing incentive returns based on real business activities, including compliant scenarios such as payment processing, trading, and asset staking. Coinbase, which had previously opposed the bill during the January review phase, also announced its support for the compromise on the same day. With the White House, the SEC, and the Treasury Department all agreeing on and recognizing this compromise rule, the Senate Banking Committee finally passed the revised bill on May 14th with 15 votes in favor and 9 against. II. How long until it is officially implemented (approximately two months) The committee vote on May 14th completed the bill revision process. The bill still needs to go through four major processes before it can be formally enacted: Integrating the three related bills to form a unified official text; a full Senate vote; a full House vote to approve it; and the President's signature to make it into law. Two major factors determine that the bill is most likely to be formally passed in July. Firstly, the August congressional recess is the actual deadline. With only about 11 weeks left before the congressional recess, missing this window would mean the bill's progress would coincide with the midterm elections and budget cycle, significantly reducing the probability of it passing smoothly during the current Congress's term. Secondly, the Trump administration is pushing hard for its implementation. President Trump has publicly set a goal of signing it by July 4th, which is about 7 weeks away. The administration has previously pressured Congress multiple times and will urge it again if progress is delayed. Most importantly, the dispute over the stablecoin interest payment clause, which lasted for four months and caused two rounds of amendments to fail, has now been completely resolved. The toughest part of the entire negotiation is over. Thirdly, the core provisions of the revised CLARITY Act. Regardless of when the bill finally completes all procedures and officially takes effect, the revisions completed on May 14th already indicate that the US cryptocurrency market is about to undergo a major shift. The following is an interpretation of the core and important clauses: 3.1 Prohibition of Indirect Interest Payments on Stablecoins (Section 404) Stablecoin yields are a point of contention between the banking and crypto industries. Banks advocate for a complete ban on interest payments on stablecoins, while crypto companies argue that providing returns to stablecoin holders is the core foundation of their business model. Section 404 provides a solution to this dispute, explicitly prohibiting exchanges from indirectly distributing interest to users. The previous operating model was as follows: users could earn returns by holding USDC on the Coinbase platform. The funds were invested in the US Treasury market through the issuer, Circle, and the resulting interest was then returned to the users. From the user's perspective, this return model was functionally no different from bank deposits. However, from the banks' perspective, this model would directly create a deposit substitution effect, which is the fundamental reason for the banking industry's strong opposition. The new bill prohibits simply holding idle positions to earn returns, and only allows rewards to be distributed based on genuine compliant business activities. However, the original text of the bill does not clearly define what constitutes &#34;compliant business activities.&#34; Whether actions such as payment transfers, on-chain governance voting, and platform logins meet the standards will be entirely left to the US Treasury Department and the Commodity Futures Trading Commission to formulate supporting detailed rules for clarification. </p><h3>3.2 Legal Token Issuance Channels (Articles 103 + 105)</h3><p><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468263_watermarknone.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="400" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468263_watermarknone.png"/></p><p>These two articles together establish a legal framework for token sales to U.S. investors.</p><p> ... Article 103 (Cryptocurrency Regulatory Exemption Clause): A registration exemption mechanism is established, allowing projects offering tokens to US users without registration with the SEC; the annual offering size is capped at $50 million or 10% of the total circulating supply (whichever is higher), with a cumulative offering cap of $200 million. Article 105 (Safe Harbor for Token Classification): Tokens possessing only governance authority and staking dividend rights cannot be classified as securities; the SEC has no right to reclassify tokens already determined as non-securities by judicial rulings. The two clauses are complementary and serve their respective functions: Article 103 opens up compliant channels for token issuance, while Article 105 strictly prevents tokens from being reclassified after issuance, ensuring the long-term effectiveness of the issuance channel. Both are indispensable. If only Article 103 exists, the issuer still faces the risk of subsequent accountability from the China Securities Regulatory Commission (CSRC); if only Article 105 exists, even if the token's attributes are compliant, there is no legal way to issue it to the market. From this point on, project issuers finally have a legitimate alternative to directly blocking US users, and the US market is officially included in the feasible scope of token issuance. </p><h3>3.3 DeFi Regulatory Exemption Provisions (Section 301)</h3><p><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468264_watermarknone.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="432" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468264_watermarknone.png"/></p><p>For the first time, decentralized finance (DeFi) protocols have a legal pathway to exemption from U.S. regulatory jurisdiction. Eligible DeFi protocols no longer need to register as securities trading platforms as required by the China Securities Regulatory Commission (CSRC).</p><p>This exemption has a clear threshold: the protocol must meet the standard of full decentralization, meaning that no single entity can unilaterally tamper with the protocol's operating rules.</p><p>This exemption has a clear threshold: the protocol must meet the standard of full decentralization, meaning that no single entity can unilaterally tamper with the protocol's operating rules.</p><p>If the management key, version upgrade authority, and security governance decision-making power are highly concentrated in one entity, exemption qualifications cannot be obtained. However, emergency response actions taken in response to security incidents are not considered centralized control. While maintaining a decentralized architecture, the protocol can still respond promptly to vulnerability attacks and security intrusions. Decentralization is no longer just a product design concept; it is now a mandatory requirement for projects entering the US market. IV. Layout Strategies After the Implementation of the CLARITY Act 4.1 Behavioral Incentive-Based Business Model Section (c)(3)(A) of the Act explicitly lists the scope of compliant behaviors, including payment transfers, on-chain governance voting, asset staking, and USDC-related transactions. **Based on this, compliant behavior can be defined as proactive actions taken by users out of practical application needs that contribute to the operation of the blockchain network and platform ecosystem, distinct from simply holding idle positions.** This incentive mechanism is similar to a credit card cashback model: the platform no longer directly pays interest on existing assets, but only issues rewards after users complete designated compliant behaviors, with the reward amount proportional to the size of the holdings. Three types of entities will benefit first:** Exchanges and crypto application platforms will break free from the involutionary model of simply relying on fee reduction competition, deeply linking user rewards to actual transactions and platform activity, attracting users to retain assets and maintain continuous activity, transforming dormant idle funds into highly sticky, active existing funds. High-traffic platforms and traditional credit card companies can use the returns from investing stablecoin reserve assets in US Treasury bonds to subsidize user incentive activities, without having to fully fund their own marketing budgets. This not only shares promotion costs and reduces self-operated marketing expenses, but also allows platforms to retain a portion of interest income as their own profit. DeFi protocols with mature staking systems will be the biggest beneficiaries. Small and medium-sized platforms that currently lack the capacity to build independent incentive systems will turn to leading compliant staking service providers. Industry resources will continue to concentrate on leading protocols with stable operations and strong credibility, forming a pattern where the strong get stronger. In summary: Relying on behavioral incentives to achieve long-term fund retention, using reserve returns to share marketing costs, and simultaneously creating a new business-to-business (B2B) revenue track. 4.2 Compliant Token Issuance Business Section 103 of the Act sets an annual fundraising cap of $50 million and a cumulative fundraising cap of $200 million; Section 105 ensures that compliantly issued tokens will not be reclassified as securities after listing. The implementation of these two provisions is equivalent to officially legalizing public token sales (ICOs/IDOs) for US investors, and will also significantly boost market demand for supporting infrastructure for compliant issuance. The entire ecosystem will benchmark against the traditional US stock IPO service system, giving rise to three major supporting business models: **Issuance Infrastructure Platform:** Providing modular SaaS one-stop services, covering functions such as user identity verification, qualified investor qualification review, automatic information disclosure, token lock-up management, and project treasury fund operation and maintenance. Projects can directly integrate and use the platform, thereby obtaining continuous enterprise service revenue without requiring projects to repeatedly build their underlying systems. Coinbase's Echo is an early representative of this model. **Issuance Consulting Agencies and Leading Venture Capital Firms:** Providing full-process services, including token architecture design, compliance plan formulation, and post-issuance regulatory dispute resolution, benchmarking the investment banking role of Goldman Sachs and Morgan Stanley in traditional IPOs. Leading crypto venture capital firms like a16z and Paradigm will gradually build their own internal compliance consulting teams. This will create a channel connecting global project teams with compliant US investors, filling the current market gap due to a lack of independent resources. Traditional asset management institutions and digital asset investment relations teams will transform into professional intermediary service providers, efficiently matching supply and demand for funds within legal limits. The industry will ultimately differentiate into two mainstream models: one is an integrated full-service platform model, combining identity verification, compliance consulting, and resource matching, represented by platforms like CoinList, Republic, and Legion; the other is a vertically modular division of labor model, where project teams outsource legal compliance, financial systems, investment relations, and lead generation to professional service providers as needed. In summary, by opening up compliant fundraising channels without regulatory risks, a complete token investment banking service ecosystem is taking shape. **Key Points to Note:** High-quality projects focusing on long-term, stable, and compliant operations will actively embrace this compliance system; however, it remains to be seen whether most projects in the market, which tend towards short-term speculation, are willing to give up the flexibility of offshore issuance and accept stringent US regulations. **V. 2026: A Year of Complete Reshaping of Industry Market Rules** 2026 will be a year of decisive change in the global cryptocurrency market landscape. If the Claritism Act is formally passed and takes effect in July, its impact will extend far beyond the United States. The complete elimination of uncertainty regarding US regulation will clear the way for institutional funds to enter the market through legal and compliant channels. Even more far-reaching will be the responses of other countries and regions globally. Governments will not stand idly by while US capital gradually gains control of the global crypto ecosystem. Regulators worldwide will closely monitor the development of various business models under the US regulatory framework, using this as a reference to formulate regulatory rules adapted to their local markets, striving to retain domestic funds and solidify their competitive advantages. With formal regulation in place, the trade-offs between the advantages and disadvantages are already becoming apparent.</p><ul><li>Positive Aspects (Scale Expansion and Widespread Popularization): Clarifying regulatory rules paves the way for institutional funds from traditional financial giants and tech giants to enter the market. Compliant products that align with the usage habits of the general public, such as behavioral incentive products, will drive the crypto industry out of its niche and truly move towards widespread adoption. </li><li>Disadvantages (Rising Costs, Slower Innovation): Projects unable to bear compliance costs will gradually be eliminated by the market; businesses that previously relied on regulatory gray areas will be forced to exit the market or undergo business restructuring. As the industry as a whole moves towards a standardized institutional development system, the early, rapid, and unregulated pace of innovation and free exploration in the crypto industry will also slow down. In conclusion, 2026 marks the official end of the era of disorderly development in the crypto industry, and the full establishment of standardized institutional order. Those practitioners who can closely follow the regulatory policies of multiple countries around the world and build compliant business systems in advance will seize the vast majority of market share in the new round of value dividends in the crypto industry.</li></ul></div></div></div>

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<p>The CLARITY Act is set for implementation, resolving the stablecoin interest debate with a bipartisan compromise. It prohibits static interest on holdings while allowing incentive income from business activities. The Senate Banking Committee has passed the bill, expected to be finalized by July, ahead of the August recess. This marks a shift towards behavior-based incentives in the crypto industry, with implications for institutional standardization and compliance costs affecting innovation.</p>

- The bipartisan compromise on stablecoin yields prohibits static interest on holdings while allowing income from business activities, marking a significant legislative shift.  
- The CLARITY Act, expected to be officially passed in July 2026, clarifies regulatory roles with the SEC and CFTC, creating a legalized framework for token issuance and exempting fully decentralized DeFi protocols from regulation.  
- This change is anticipated to foster institutional investment, reshape the cryptocurrency market into a compliant ecosystem, and slow innovation due to increased regulation and compliance costs.

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The Clarity Act is about to be implemented: Layout of six major business sectors