TLDR
- Banking industry resistance to stablecoin rewards provisions has stalled progress on the CLARITY Act in the Senate Banking Committee.
- Senator Angela Alsobrooks informed banking executives that compromise from all parties will be necessary to advance the legislation.
- A potential middle-ground solution would permit transaction-based stablecoin rewards while prohibiting interest on idle balances.
- Senator Thom Tillis remains undecided and plans additional consultations with Coinbase representatives and banking associations before committing.
- Prediction markets on Polymarket show 69% probability of presidential approval in 2026, with industry insiders forecasting July passage.
Legislative momentum for the Digital Asset Market Clarity Act has encountered significant headwinds as tensions between traditional financial institutions and cryptocurrency advocates create a political impasse. During Tuesday’s American Bankers Association summit in Washington, Senator Angela Alsobrooks, a Democratic member of the Senate Banking Committee, candidly addressed attendees about the need for mutual concessions.
“I think I have to level set that all of us will probably walk away just a little bit unhappy,” Alsobrooks said.
The central controversy revolves around whether cryptocurrency platforms should be permitted to offer incentives on stablecoin holdings. Traditional banking institutions worry that such offerings would trigger a migration of customer deposits away from conventional savings products toward digital asset platforms. The American Bankers Association has mounted an aggressive lobbying campaign to eliminate what it characterizes as a regulatory gap in the proposed legislation.
Cryptocurrency industry representatives have already conceded ground by agreeing to prohibit yield payments on dormant stablecoin accounts. The remaining point of contention centers on whether incentives connected to active use — such as purchases or exchanges — should remain permissible.
JPMorgan Chase CEO Jamie Dimon recently indicated the banking sector might accommodate transaction-linked incentives, a position that aligns with proposals the crypto industry has presented during White House discussions.
The Compromise Taking Shape
Alsobrooks has partnered with Republican Senator Thom Tillis to craft legislative language acceptable to competing interests. Their objective involves permitting certain stablecoin incentive structures while safeguarding traditional banks against substantial deposit erosion.
Senator Mike Rounds, also serving on the Banking Committee, acknowledged Tuesday that he hasn’t settled on an approach to stablecoin rewards but floated the possibility of tying such benefits to transaction volume rather than account holdings.
The Senate Banking Committee had originally scheduled a markup session for the legislation, which was subsequently postponed. A rescheduled markup could materialize before March concludes, contingent primarily on whether Tillis endorses the working draft.
Tillis has withheld his commitment thus far. Despite participating in multiple meetings with industry stakeholders and White House personnel last week, he insists on conducting at least one additional session with [[LINK_START_1]]Coinbase[[LINK_END_1]] representatives and banking trade associations before finalizing his position.
Where the Bill Stands Now
Should the legislation successfully navigate the Banking Committee markup process, it would be reconciled with a companion version already approved by the Senate Agriculture Committee. Subsequently, the consolidated bill would require a full Senate vote, necessitating substantial Democratic support.
Securing that support presents considerable obstacles. Democratic lawmakers have expressed apprehension regarding decentralized finance protocols, unfilled commissioner positions at the CFTC and SEC, and conflict-of-interest standards governing senior administration officials with personal cryptocurrency investments — widely understood as references to President Trump.
Scheduling constraints compound these challenges. Senate floor time represents a scarce resource, and competing priorities including international relations matters and Trump’s push for voter identification legislation could relegate crypto policy further down the legislative queue.
The U.S. Office of the Comptroller of the Currency recently released a proposed rulemaking consistent with last year’s GENIUS Act stablecoin framework. Cryptocurrency industry observers maintain the proposal preserves flexibility for their intended rewards programs.
Polymarket currently assigns a 69% probability to Trump signing the legislation into law. Kristin Smith, President of the Solana Policy Institute, has publicly forecast CLARITY Act passage by July.
Industry coalitions characterize ongoing negotiations as progressing constructively while acknowledging significant work remains. They are simultaneously developing contingency strategies should the markup extend beyond March.
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