The most consequential piece of crypto legislation in U.S. history is stuck — and the reason has nothing to do with crypto. The Digital Asset Market Clarity Act (H.R. 3633), which passed the House in July 2025, has stalled in the Senate over a single provision: whether crypto platforms can offer ...
"An extremely pointed message from POTUS to those who are dragging their feet on Clarity." — Brad Garlinghouse, CEO, Ripple
The most consequential piece of crypto legislation in U.S. history is stuck — and the reason has nothing to do with crypto. The Digital Asset Market Clarity Act (H.R. 3633), which passed the House in July 2025, has stalled in the Senate over a single provision: whether crypto platforms can offer yield on stablecoin deposits. On March 5, the American Bankers Association and major lenders including JPMorgan Chase and Goldman Sachs formally rejected a White House-brokered compromise, plunging the bill into crisis.
The stakes are enormous. Standard Chartered estimates that yield-bearing stablecoins could drain $500 billion from U.S. bank deposits by 2028. At issue is not just a line in a bill — it is the competitive architecture of American financial services for the next decade. If the Clarity Act fails, the industry faces another 12–18 months of regulatory limbo. If it passes, it will for the first time cleanly divide digital asset oversight between the SEC and CFTC, creating the legal foundation for institutional-scale crypto markets in the United States.
President Trump has publicly sided with the crypto industry, attacking banks for "trying to undercut the GENIUS Act" and "hold the Clarity Act hostage." The White House's crypto advisers, David Sacks and Patrick Witt, are personally mediating. But with July's pre-recess deadline approaching and Senate votes uncertain, the window is closing fast.
The Clarity Act addresses the foundational problem that has plagued the U.S. crypto industry since inception: nobody knows which regulator is in charge. Under the SEC's former Chair Gary Gensler, the agency aggressively applied the 1946 Howey test to classify the vast majority of digital assets as securities, launching enforcement actions against Coinbase, Ripple, and dozens of others. The CFTC, meanwhile, maintained that many decentralized tokens function more like commodities.
The Clarity Act resolves this by creating three distinct categories:
Digital Commodities — tokens whose value is "intrinsically linked" to the use of a blockchain network, provided the network operates independently from a single issuer, is fully operational, and publicly accessible. These fall under exclusive CFTC jurisdiction. Practically, this means tokens like Bitcoin, Ethereum, and Solana would be regulated as commodities.
Investment Contract Assets — tokens issued by centralized entities that function like securities offerings. These remain under SEC jurisdiction, subject to registration and disclosure requirements.
Permitted Payment Stablecoins — dollar-pegged tokens governed by the GENIUS Act (signed into law in 2025), which established reserve and transparency requirements for stablecoin issuers.
The bill would require crypto exchanges and brokers dealing in digital commodities to register with the CFTC — a lighter-touch regime than SEC broker-dealer registration — while preserving SEC authority over securities-like token offerings. For the industry, this represents the difference between operating under a framework designed for public equities and one tailored to digital commodity markets.
The legislation itself is not controversial. What has paralyzed the Senate is a fight over stablecoin rewards that pits the banking lobby against the crypto industry in a zero-sum battle for American savings.
The core question: can platforms like Coinbase offer customers a yield — currently around 3.5–4.1% APY — for holding USDC or other stablecoins?
The crypto position: Stablecoin yield is already permitted under the GENIUS Act. Coinbase earned $1.35 billion in stablecoin revenue in 2025, with Circle paying the exchange over $900 million in distribution fees. Bloomberg Intelligence projects this revenue line could expand two to seven times if stablecoin payment adoption accelerates. The crypto industry argues that restricting yield would "offshore innovation and entrench incumbents."
The banking position: Major banks arrived at White House negotiations with a "principles document" demanding a complete ban on stablecoin yield, rewards, bonuses, and incentives. JPMorgan CEO Jamie Dimon framed the issue bluntly: if crypto firms want to pay customers stablecoin rewards, "they need to be properly regulated and become banks so they can compete fairly with traditional lenders." The American Bankers Association warned that yield-bearing stablecoins represent an existential threat to deposit-funded lending, the foundation of the U.S. banking model.
The banks' argument is not frivolous. Traditional banks earn money by taking deposits — on which they pay near-zero interest — and lending them out at higher rates. If consumers can earn 4% on a stablecoin with instant liquidity and no lock-up, the incentive to keep money in a checking account diminishes significantly.
But the crypto industry's counter is equally sharp: banks have posted record profits while offering depositors a fraction of prevailing interest rates. The Federal Reserve's benchmark rate sits well above what most savings accounts pay. Stablecoins, the argument goes, simply return to consumers the yield that banks have been keeping for themselves.
Standard Chartered published a widely cited analysis projecting that if the stablecoin market grows to approximately $2 trillion — up from roughly $230 billion today — U.S. banks could see $500 billion in deposits migrate to stablecoins by 2028. Emerging-market banks could lose close to $1 trillion over the same period.
The threat is not evenly distributed. Diversified global banks like JPMorgan and Goldman Sachs can absorb deposit losses through investment banking and trading revenue. Regional and community banks — which depend far more heavily on deposit-funded lending — face a potentially existential squeeze. This explains why the American Bankers Association, which represents thousands of smaller institutions, has been the most vocal opponent of stablecoin yield provisions.
The irony is that the same Wall Street banks objecting to stablecoin yield are simultaneously building their own crypto infrastructure. Citigroup is launching institutional Bitcoin custody in Q2–Q3 2026, integrating BTC into its $30 trillion custody platform. Morgan Stanley has filed for Bitcoin, Ethereum, and Solana exchange-traded products and is rolling out spot crypto trading on E*TRADE. Both banks clearly see crypto as a growth business — they simply want to compete on their terms, within the regulatory perimeter they already control.
The Clarity Act has become a rare test of whether the Trump White House can broker a deal between two of its most important constituencies: the financial sector and the crypto industry.
Trump's position has been unambiguous. On March 3, he posted on Truth Social: "The U.S. needs to get Market Structure done, ASAP. Americans should earn more money on their money." He added: "The Banks are hitting record profits, and we are not going to allow them to undermine our powerful Crypto Agenda." The statement carries particular weight given that Trump's family-affiliated venture, World Liberty Financial, issues its own stablecoin (USD1) and recently applied for an OCC trust charter.
The White House had established a tentative end-of-February deadline for reaching a compromise. That deadline passed without agreement. Draft language is still circulating among lawmakers, with presidential aides David Sacks and Patrick Witt personally mediating between the two sides.
Senate dynamics are complex. The bill needs to clear both the Senate Banking Committee and the Agriculture Committee, whose respective drafts must then be reconciled before a full Senate vote. Key Democratic supporters include Chuck Schumer (D-NY) and Ruben Gallego (D-AZ). But Senator Elizabeth Warren (D-MA) remains a formidable obstacle, blocking legislative attachment tactics and demanding additional provisions on DeFi illicit finance protections and restrictions on government officials' crypto business ties.
Polymarket prediction markets currently price the odds of Clarity Act passage at approximately 70%.
Kristin Smith, President of the Solana Policy Institute and a 25-year veteran of Washington policy, outlined the critical path in a March 6 interview with Fortune:
"If the Senate Banking Committee can mark up a bill in March or April, it can move to the floor. July is the big deadline before the August recess. If they miss that, the next window would be in the fall, but these next six weeks are critical."
Scenario 1: Passage by July (Base Case — ~50% probability) Senate committees reach a compromise in April, likely involving a cap or qualification on stablecoin yield rather than an outright ban. The reconciled bill reaches the Senate floor in June and passes before the August recess. This would provide regulatory clarity in time for the 2026 institutional adoption wave already underway.
Scenario 2: Fall Push (~25% probability) Negotiations drag past July. Congress returns in September with midterm elections looming in November. The bill becomes a political football, with passage possible but complicated by campaign dynamics.
Scenario 3: Punted to Next Congress (~25% probability) The stablecoin yield dispute proves irreconcilable. The bill dies in committee, extending regulatory uncertainty through 2027. This scenario would significantly dampen institutional capital deployment and likely push stablecoin innovation offshore.
The Clarity Act is the most important crypto bill in U.S. history. It would cleanly divide digital asset regulation between the SEC and CFTC for the first time, creating the legal foundation for institutional-scale crypto markets. Its failure would extend regulatory limbo by 12–18 months.
The bill is not stuck on crypto policy — it's stuck on banking policy. The stablecoin yield dispute is fundamentally a fight over who controls American savings: traditional banks paying near-zero deposit rates, or crypto platforms offering 3.5–4.1% on dollar-pegged stablecoins.
$500 billion in bank deposits are at stake. Standard Chartered's projection of deposit flight into stablecoins explains why the banking lobby has drawn a hard line, even at the cost of blocking legislation that Wall Street banks otherwise support.
Trump's personal involvement raises the stakes — and the conflicts. The President's family operates a stablecoin venture (USD1) while simultaneously pressuring banks to accept stablecoin yield provisions. This has drawn criticism from Democratic lawmakers and could complicate bipartisan support.
The next six weeks are decisive. If the Senate Banking Committee cannot mark up the bill by April, the July pre-recess window closes, and the legislation likely slides into 2027.
Wall Street is hedging both sides. Citi and Morgan Stanley are building institutional crypto infrastructure (custody, trading, ETPs) regardless of legislative outcomes — a signal that major banks view crypto integration as inevitable, even as their trade association fights to limit stablecoin competition.
The Clarity Act's stall is a microcosm of a larger structural tension in American finance. Traditional banks have operated for decades in a regulatory environment that protects their deposit franchise — the low-cost funding base on which the entire lending ecosystem depends. Stablecoins, by offering consumers transparent, competitive yields on dollar-denominated assets, threaten to unbundle that franchise for the first time since money market funds emerged in the 1970s.
The economic logic is straightforward. In a world where the Federal Reserve's benchmark rate hovers above 4%, consumers holding money in bank accounts earning 0.5% are effectively subsidizing their bank's profit margin. Stablecoins make that subsidy visible — and optional. Whether the final legislation permits, restricts, or caps stablecoin yield, the competitive pressure is now permanent.
For the broader crypto industry, the Clarity Act's fate will determine whether the United States becomes the primary jurisdiction for tokenized financial markets or cedes that ground to Singapore, the UAE, and the European Union. The economic value at stake — from transaction fee revenues to institutional custody flows to the competitive structure of lending markets — runs into the trillions.
The next six weeks will tell us whether Washington can resolve this in time.