As the US Senate prepares to mark up the Digital Asset Market Clarity Act, known as the CLARITY Act, next week, banks are ramping up their lobbying efforts to obstruct progress on its stablecoin provisions. Despite bipartisan support for the bill in the House of Representatives last July 2025 and a fast-tracked timeline aiming for presidential approval before July 4, the Senate’s negotiations have stalled over how yield-bearing stablecoins should be regulated.
The banking sector is now publicly opposing the compromise language crafted by Senators Thom Tillis and Angela Alsobrooks. Major financial trade groups argue that this language could undermine local lending by encouraging capital to flow away from traditional banks into digital asset firms offering stablecoin rewards. These groups, including the American Bankers Association and Consumer Bankers Association, claim loopholes in Section 404 would allow crypto companies to incentivize holding stablecoins through non-traditional interest-like rewards based on account duration or balance.
Despite this pushback, Senate proponents of the CLARITY Act remain optimistic. With support from elements of the Trump administration, negotiators are resisting banking industry pressure, emphasizing that the current provisions effectively prevent direct payment of yield and interest on stablecoins while allowing other reward structures. Senator Tillis defended the drafted language as a balanced outcome achieved after months of negotiations.
Amidst this discord, some financial institutions without major consumer deposit operations appear more amenable to the framework. However, banking lobbyists argue that such concessions could still jeopardize traditional lending practices and community growth financing.
With Senate Banking Subcommittee on Digital Assets Chair Cynthia Lummis urging swift legislative action to end regulatory uncertainty, Senate lawmakers are targeting a committee markup in May. This effort is crucial for establishing jurisdictional boundaries between the SEC and CFTC and setting operational standards for digital asset markets, including stablecoins, DeFi participants, and exchange platforms.
The urgency of passing this bill before the August recess is underscored by fears that failure could lead to capital flight and diminish US influence in the global digital asset sector. While banking opposition persists, market sentiment remains positive, with major industry figures expressing renewed optimism about legislative progress. Prediction markets currently indicate over a 60% likelihood of the CLARITY Act becoming law by 2026.
As the Senate markup approaches on May 11, the ability to overcome traditional financial resistance will be tested amid bipartisan efforts to advance digital asset regulation.