CryptoSlate
A coalition of five major US bank trade groups — the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America — issued a joint rejection this week of the bipartisan stablecoin yield compromise drafted by Senators Thom Tillis and Angela Alsobrooks. The fight is now heading into a Senate Banking Committee markup the week of May 11, with Senator Tim Scott confirming lawmakers are working toward a floor-ready package and Senator Bernie Moreno targeting President Donald Trump's desk by end of June.
Why it matters
The banking coalition's core complaint is that Section 404 still lets digital asset platforms calculate and distribute rewards based on account balance, duration, and tenure — language the banks call a distinction without a difference from traditional deposit interest. Their internal research claims yield-bearing stablecoin alternatives could siphon enough liquidity to shrink consumer, small-business, and agricultural lending capacity by as much as 20%. Tillis has pushed back, arguing the text explicitly prohibits rewards that functionally mimic bank interest and that the industry has had months to negotiate the wording. Galaxy Digital's Alex Thorn went further, suggesting the lobbying posture is obstruction by design rather than good-faith amendment.
Market impact
The political momentum still tilts toward passage. Senator Cynthia Lummis framed the markup as a decisive break from years of regulatory ambiguity, and prediction markets now price the odds of the CLARITY Act becoming law in 2026 above 60%. If the bill clears committee and the Senate reconciles it with the already-passed House version and the GENIUS Act framework, the US would finally draw jurisdictional lines between the SEC and the CFTC, codify custody and DeFi safe harbors, and lock in a federal payment-stablecoin regime. A failed markup before the August recess, by contrast, almost certainly defers US market structure clarity into 2027 — a window executives like Ripple's Brad Garlinghouse and Coinbase's Brian Armstrong have warned is already pushing capital and builders offshore.
Frequently asked questions
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What is the CLARITY Act and what would it do?
The CLARITY Act is a sweeping digital asset market-structure bill that cleared the House in July 2025. It would draw jurisdictional lines between the SEC and CFTC, set operational standards for custodians and exchanges, create safe harbors for DeFi protocols and validators, and establish a federal regime for payment…
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Why are US banks fighting the stablecoin yield language?
A coalition of five major trade groups — ABA, BPI, CBA, the Financial Services Forum, and ICBA — argues that Section 404 still allows exchanges to distribute rewards based on balance, duration, and tenure, which they say functionally mirrors bank deposit interest and could drain the deposit base that funds consumer…
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How much deposit funding could stablecoin yields actually drain?
According to internal research cited by the bank coalition, yield-bearing stablecoin alternatives could siphon off enough liquidity to reduce available capital for consumer, small-business, and agricultural loans by as much as 20%.
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What is the timeline for the bill to become law?
A Senate Banking Committee markup is scheduled for the week of May 11. Senator Tim Scott has confirmed lawmakers are working toward a bipartisan May markup, and Senator Bernie Moreno is publicly targeting final passage and delivery to President Trump's desk by the end of June 2026.
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What are the odds the CLARITY Act actually passes?
Digital prediction markets currently price the probability of the CLARITY Act becoming law in 2026 above 60%. Industry executives at Ripple and Coinbase have publicly noted a structural shift in legislative optimism, though the banking lobby's latest pushback tests whether that momentum holds.
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