Key Takeaways
- Senate Banking Committee must greenlight the CLARITY Act before April ends or 2026 passage becomes highly unlikely
- Prediction platforms show declining confidence: Polymarket at 56% (down 9%), Kalshi at 30% for pre-June passage
- Central controversy revolves around permitting stablecoin issuers to distribute yield to holders
- Coinbase withdrew its endorsement in January, stating a flawed bill is worse than no legislation
- Gnosis co-founder cautions the legislation might consolidate crypto control among centralized players
Time is running short for the CLARITY Act, America’s proposed crypto market structure legislation. Galaxy Research’s head of research, Alex Thorn, emphasized that unless the bill reaches the Senate floor by early May, its prospects for 2026 passage become virtually nonexistent. This requires Senate Banking Committee approval before April concludes.
Senate Majority Leader John Thune has already indicated low confidence in meeting the April timeline. With the Senate’s current attention directed toward the SAVE America Act, the CLARITY Act has been relegated to a lower priority position.
According to Thorn, each passing day without progress reduces the available window for floor consideration. Should the committee fail to act by April’s end, he characterized the likelihood of 2026 enactment as “extremely low.”
Betting markets mirror this growing skepticism. Polymarket data indicates the probability of 2026 passage has fallen 9 percentage points to 56%. Kalshi presents an even more pessimistic outlook, pricing in just 30% odds for passage before June and a mere 7% chance before May.
Stablecoin Yield Provision Emerges as Primary Battleground
The most contentious issue remains whether stablecoin issuers should be permitted to pass along interest earnings to their users.
Representative French Hill has declared that prohibiting stablecoin yield represents a non-negotiable requirement for Senate advancement. Traditional banking institutions contend that interest-bearing stablecoins would siphon deposits from their regulated operations.
Cryptocurrency firms counter that enabling stablecoin rewards enhances their utility for payment applications. Coinbase rescinded its support for the legislation in January. Chief Executive Brian Armstrong criticized the proposal for undermining decentralized finance, prohibiting stablecoin yield, and constraining tokenized real-world assets. “We’d rather have no bill than a bad bill,” he declared.
Senator Angela Alsobrooks suggested that compromise from both camps may prove necessary. Paul Grewal, serving as both White House crypto adviser and Coinbase Chief Legal Officer, has also reproached banks for impeding progress.
DeFi Oversight and Jurisdictional Questions Remain Outstanding
Thorn indicated that the stablecoin yield question may not represent the final hurdle. He identified additional unresolved matters concerning decentralized finance regulation, developer liability protections, and the division of regulatory responsibilities between the SEC and CFTC.
Attorney Jake Chervinsky noted that banking institutions also harbor concerns about stablecoin liquidity migrating into DeFi protocols, extending beyond simple yield distribution.
Dr. Friederike Ernst, co-founder of Gnosis, cautioned that the bill’s present framework threatens to funnel all cryptocurrency activity through licensed gatekeepers. This arrangement could concentrate crypto infrastructure control among a limited group of major institutions, she warned.
Ernst acknowledged certain positive elements in the legislation, including safeguards for peer-to-peer transactions and self-custody rights, along with clearer delineation of SEC and CFTC jurisdictions.
Senator Bernie Moreno expressed continued optimism for April passage and presidential approval from President Trump. However, Thorn assessed that this schedule now appears increasingly unrealistic.
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