Crypto News
The Senate Banking Committee released the full 309-page CLARITY Act just after midnight on Tuesday, May 11, 2026, ahead of a Thursday committee hearing that could advance the most comprehensive crypto market structure legislation the U.S. has attempted. The headline provision is a 1:1 reserve mandate requiring all payment stablecoin issuers to hold high-quality liquid assets against every token in circulation, with qualifying reserves restricted to short-duration U.S. Treasuries under 90 days, overnight repurchase agreements, and central bank deposits — a tighter composition than current market practice. The second major element draws a hard jurisdictional line between the SEC and CFTC, assigning oversight based on whether a token functions as a security with ongoing management-led profit expectations or as a digital commodity within a decentralized protocol.
Why it matters
That jurisdictional split has been missing from U.S. law since Bitcoin's creation, and its absence has been the single largest barrier to institutional custody approvals at regulated fiduciaries. On stablecoin yield, the bill is deliberately constrained: interest or yield payments are permitted only when made "solely in connection with the holding of payment stablecoins" or structured to be economically equivalent to interest on a bank deposit. Coinbase CEO Brian Armstrong, whose company sat at the center of those negotiations, said publicly on Monday that "not everyone got everything they wanted, but they got the must-haves," and confirmed Coinbase is working with at least five of the largest global banks on implementation. The reserve composition specifically pressures Tether, whose USDT disclosures have historically included corporate paper, money market funds, and secured loans, none of which would qualify under this framework; Circle's USDC, already tilted toward short-duration Treasuries and cash, sits closer to compliance.
Market impact
Galaxy's research has argued that stablecoin growth will predominantly originate offshore, framing the reserve mandate as an onboarding mechanism for foreign dollar demand into U.S.
Frequently asked questions
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What is the CLARITY Act's 1:1 stablecoin reserve mandate?
The bill requires every payment stablecoin issuer to hold high-quality liquid assets equal to the value of tokens in circulation. Qualifying reserves are restricted to short-duration U.S. Treasuries under 90 days, overnight repurchase agreements, and central bank deposits — a tighter composition than current market…
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How does the bill split regulatory authority between the SEC and CFTC?
The CLARITY Act assigns oversight based on token function: tokens that act as securities with ongoing management-led profit expectations fall under the SEC, while digital commodities operating within decentralized protocols fall under the CFTC. That jurisdictional split has been missing from U.S. law since Bitcoin's…
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Why does the reserve composition rule hurt Tether more than Circle?
Tether's USDT reserve disclosures have historically included corporate paper, money market funds, and secured loans — none of which would qualify as short-duration Treasuries, overnight repos, or central bank deposits. Circle's USDC, already tilted toward short-duration Treasuries and cash, sits closer to compliance…
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What is the main Democratic objection to the bill?
Ranking Democrat Elizabeth Warren's opposition centers on a missing conflict-of-interest provision, with Warren stating that Trump and his family have "raked in at least $1.4 billion in gains from crypto deals alone" in his first year. Democrats including Kirsten Gillibrand have signaled they will not allow the bill…
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What is the legislative path from here to enactment?
The bill needs a committee vote on Thursday, must be merged with a version approved by the Senate Agriculture Committee, requires the conflict-of-interest provision to be negotiated and inserted, and then must clear a 60-vote threshold on the Senate floor. White House adviser Patrick Witt has set a July 4 target;…
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