Clarity Act could spark boom in crypto yield-as-a-service infrastructure

How Section 404 reshapes yield generation

Section 404 of the Clarity Act would prohibit Digital Asset Service Providers and their affiliates from offering yield solely as a function of holding a digital asset. That's a hard line: no passive rewards for simply staking or holding.

But Vollono sees this not as a death knell but as a pivot point. "What this effectively does is shift the industry from a hold-to-earn market to a use-to-earn market. You're going to need compliant yield strategies to generate rewards on what would otherwise be idle capital," he said.

The provision could fundamentally reshape how crypto users earn returns, pushing the market away from passive hold-to-earn products and toward more active, compliant yield-generation strategies. The technology stack already exists—smart contracts, oracles, DeFi rails, and API-based infrastructure are ready to go.

The infrastructure play

Here's where it gets interesting. Vollono expects the likely result to be the emergence of a middle layer of infrastructure providers focused on compliant yield generation, many powered by artificial intelligence.

Potential beneficiaries include DeFi infrastructure providers, vault curators, collateral management platforms, automated treasury services, lending markets and rewards systems. The tools to automate all of this in a regulated market already exist—they just need the legal framework to operate at scale.

Vollono, who spent more than seven years at Morgan Stanley and served at SIFMA working on industry advocacy and market structure issues, believes regulatory clarity unlocks something bigger. "Once these issues are resolved, it allows capital at scale to enter the market. That's the real catalyst here," he said.

Timeline and institutional momentum

The Clarity Act has already cleared the Senate Banking Committee and is now expected to move into the full Senate to be merged with the Senate Agriculture Committee version before House reconciliation. An optimistic timeline points to a full vote as early as July, with regulators having roughly 12 months to implement the framework.

The bill would establish the first comprehensive U.S. regulatory framework for digital assets, ending years of uncertainty over whether tokens fall under SEC or CFTC jurisdiction. It would create clearer rules for exchanges, brokers, stablecoin issuers and decentralized finance platforms.

The debate has exposed tensions between traditional banks and the crypto industry, particularly over stablecoins and deposit migration. Vollono said banks are worried about deposit flight, but he believes that concern is largely overstated. The real story isn't about moving money—it's about moving infrastructure.