Clarity Act advances: No restrictions on stablecoin reward mechanisms based on genuine activities or transactions

Last Friday, the US Congress reached a compromise regarding the stablecoin reward mechanism in the Digital Asset Market Clarity Act (referred to as the Clarity Act). This progress has injected a relatively clear regulatory framework into the stablecoin ecosystem. The bill distinguishes between passive holding returns and rewards based on actual activities, restricting the former from resembling bank deposit interest, while leaving room for incentives driven by usage such as transactions, payments, and staking. This arrangement is seen by the market as relatively favorable for major participants like Circle and Coinbase, with stock price fluctuations reflecting investors' adjustments to expectations of regulatory implementation.

Circle: Possible pathways for core benefits of USDC issuance

As the primary issuer of USDC, Circle's compromise in the Clarity Act provides certainty for its business model. Backed 100% by high-quality reserve assets, USDC occupies a significant share of the global stablecoin market. In the past, stablecoin yield mechanisms were one of the key tools for attracting holdings and liquidity. The act prohibits passive income akin to bank interest solely for holding stablecoins but allows rewards tied to real activities. This means Circle can continue exploring compliant incentive methods through partner platforms.

This also helps Circle maintain USDC's utility and liquidity. For instance, in payment, cross-border settlement, or DeFi scenarios, usage-based rewards would enhance user retention rather than relying solely on holding returns. This distinction avoids direct competition with traditional banking deposit services while offering Circle room to expand within a compliant framework. As the global stablecoin market grows gradually, USDC’s compliance advantages will become more evident in institutional adoption, AI Agent micropayments, and tokenization fields.

However, potential challenges must be approached cautiously. Regulatory specifics regarding activity-based rewards still need clarification; if defined too narrowly, it may increase compliance costs. Additionally, Circle’s reserve management, audit transparency, and international expansion remain subject to macro interest rate environments and geopolitical factors. Overall, the implementation of this act represents regulatory efforts to provide clearer paths for stablecoin issuance, but actual commercial impacts require further observation through subsequent market data.

Coinbase: Potential Positive Factors from Distribution and Ecosystem Synergy

Image source: blocktempo, odailynews

As an important distributor and trading platform for USDC, Coinbase maintains a close partnership with Circle. The compromise in the Clarity Act permits platforms to offer incentives based on users’ real activities (such as trading, transferring funds, or providing liquidity), giving Coinbase’s stablecoin-related operations some flexibility. Previous market concerns over strict restrictions potentially reducing user incentives and causing customer attrition have been somewhat alleviated by the compromise, driving positive reactions in related stock prices.

From a business perspective, Coinbase can integrate stablecoin rewards with existing services, designing compliant incentives in areas such as platform trading volume, AI Agent micropayments, or institutional custody scenarios. This could not only boost trading volumes and user engagement but also strengthen its role as a hub within the crypto ecosystem.

At the same time, as a publicly listed company, Coinbase must address multiple considerations including shareholder returns, risk management, and regulatory scrutiny. Adjustments in reward mechanisms may prompt product design optimization toward models emphasizing practical utility, which theoretically might enhance long-term business sustainability. However, short-term impacts require monitoring user behavior shifts and competitive dynamics.

The Forward-Looking Role of Stablecoin Reward Mechanisms on Hong Kong's Stablecoin Development Direction

Image source: Cointelegraph

The Clarity Act's approach of not restricting activity-driven incentive mechanisms could provide a useful forward-looking reference for the development direction of Hong Kong's stablecoins. The HKMA has already issued the first batch of licenses to Hong Kong dollar stablecoin issuers. In the future, when designing local stablecoin incentive arrangements, Hong Kong may consider drawing on this differentiation approach, exploring incentive models linked to real-world usage scenarios within a compliant framework. This would enhance the liquidity and practicality of Hong Kong dollar stablecoins while avoiding direct business competition with traditional banks. It is expected to promote alignment between Hong Kong stablecoins and international mainstream frameworks, providing more options for cross-border applications and regional liquidity in the Asia-Pacific, although the specific path will still need to be gradually validated in conjunction with local regulatory requirements and market feedback.

Summary

The implementation of the Clarity Act's stablecoin incentive mechanism provides market participants such as Circle and Coinbase with a framework option for continued operation within compliance boundaries. It helps enhance regulatory certainty and supports the role of stablecoins in payments, transactions, and ecosystem integration. However, it is recommended to carefully review disclosure documents before engaging with related products and assess them based on individual risk tolerance. This column will continue to monitor subsequent legislative developments and industry data changes. Thank you for your attention!

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