Key Takeaways
- North Carolina Senator Thom Tillis has requested that Senate Banking Chair Tim Scott postpone the CLARITY Act markup to May
- The central disagreement centers on provisions related to stablecoin yield payments and rewards programs
- Traditional banking institutions worry that stablecoin yield offerings could drain deposits from conventional banks
- The Digital Chamber, representing crypto interests, advocates for immediate legislative progress
- Senator Moreno has cautioned that failure to pass the bill by May could derail crypto legislation indefinitely
The CLARITY Act, a comprehensive crypto market structure bill being considered by the US Senate, is encountering fresh delays. North Carolina Republican Senator Thom Tillis informed the press on Monday that he anticipates the Senate Banking Committee will not conduct its markup session in April. Instead, he has requested Committee Chair Tim Scott to reschedule the proceedings for May.
Tillis, who has played a central role in negotiations between traditional finance and cryptocurrency stakeholders, emphasized to reporters the necessity of allowing adequate time for all interested parties to express their positions before proceeding.
The legislation received bipartisan approval from the full House of Representatives nearly twelve months ago. While it has successfully passed through the Senate Agriculture Committee, it must still navigate the Senate Banking Committee before reaching the full Senate for a floor vote.
Stablecoin Rewards at Center of Conflict
The primary obstacle involves a contentious debate surrounding stablecoin reward mechanisms. Traditional banking representatives express apprehension that permitting stablecoin issuers or cryptocurrency platforms to offer yield to token holders could trigger significant deposit withdrawals from conventional financial institutions, particularly affecting smaller community banks.
According to banking industry representatives, these smaller institutions may lack the financial capacity to weather substantial deposit migration.
Conversely, cryptocurrency enterprises including Coinbase have advocated for more accommodating provisions regarding stablecoin rewards programs. These companies contend that imposing restrictions on yield offerings would stifle technological advancement and innovation.
According to the most recent draft language from last week, the legislation would prohibit rewards on dormant stablecoin holdings while permitting yield generation connected to active use cases such as transaction processing. An informed source revealed to The Block that modifying this language at the current stage would prove challenging.
Senators Tillis and Angela Alsobrooks, a Maryland Democrat, have been collaborating to find common ground on this contentious matter.
Advocacy Groups Apply Pressure
The Digital Chamber, an organization representing cryptocurrency industry interests, submitted correspondence Monday to the Senate Banking Committee requesting expedited advancement of the legislation to markup “as soon as the calendar allows.”
The communication bore the signature of CEO Cody Carbone and was directed to both Tim Scott and Elizabeth Warren, the ranking Republican and Democrat on the committee respectively.
“More than 70 million Americans who have embraced digital assets deserve the regulatory clarity they have waited far too long for,” said Taylor Barr, the group’s government affairs director.
The Digital Chamber highlighted that over 270 days have elapsed since the House approved the measure.
US Treasury Secretary Scott Bessent has additionally applied pressure on lawmakers. During March, he cautioned that should Democrats secure control of the House during November’s midterm elections, the prospects for passing the legislation could significantly diminish.
Senator Bernie Moreno previously warned at the DC Blockchain Summit that if the bill did not pass by May, “digital asset legislation will not pass for the foreseeable future.”
This week, the Senate Banking Committee’s immediate focus will shift to Tuesday’s confirmation proceedings for Kevin Warsh, President Trump’s selection for Federal Reserve Chair.
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