If you analyze what stands in the way of advancing the crypto industry’s main goal in Washington – the Clarity Act legislation – the part of the debate the industry can control is narrow: stable rewards.
This isn’t the only issue that could potentially derail the bill aimed at finally establishing a legal framework fit for crypto markets in the United States, but it’s one that industry insiders have their say on. Companies such as Coinbase have vigorously defended this commercial territory, wanting to continue to incentivize their customers to interact with stablecoins on their platforms.
But Wall Street banking lobbyists have stepped in and made the argument that getting a return on stablecoin accounts is a lot like getting interest on savings accounts, and if the former kills the latter, the death of the deposit industry means the strangulation of bank lending. This argument caught the attention of enough lawmakers on both sides of the aisle to stop the Senate’s Digital Asset Market Clarity Act in its tracks.
The heels are getting bogged down, and the resulting logjam will become harder and harder to break as the weeks go by, until the vagaries of the Senate calendar can effectively push the whole mess toward 2027.
The top?
So far, the crypto side has argued that it has the upper hand, as the already-passed crypto bill – the Guiding and Establishing National Innovation for Stablecoins in the United States (GENIUS) Act – appeared to allow third-party platforms such as Coinbase to offer rewards tied to tokens from other issuers, such as Circle’s. However, a recently proposed rule from the Office of the Comptroller of the Currency that implements GENIUS concluded that such relationships may violate the intent of the law, slightly shaking the confidence of the crypto world.
The last time crypto and banking dealmakers spoke with White House officials, President Donald Trump’s crypto advisers seemed to favor a compromise that would allow some rewards — not for simply holding stablecoins, but for actually using them for transactions and to support crypto infrastructure. Crypto insiders felt confident in their leverage, with GENIUS behind them and the White House favoring certain rewards.
But bank officials didn’t necessarily see the White House in control, because the White House isn’t getting a vote to advance the Senate bill. The bankers have not yet raised their hands to move beyond their previous position that virtually all categories of awards should be banned, although the White House has set the end of February as an informal (unmet) deadline for compromise.
So where does this leave us?
Banks can hold their own, and if they continue to portray stablecoin rewards as an existential threat to the traditional financial system and Main Street lending, it could keep their allied lawmakers on their side to the fatal detriment of the Clarity Act. What they risk is that the GENIUS law remains the law of the land on this point. The OCC’s latest work may help increase their confidence that strict award limits will be put in place, but this final agency rule is expected to rely on a very restrictive interpretation.
The crypto industry may also hold out, and if it can successfully lobby against the OCC’s proposed rule, it may still manage to preserve the stable rewards programs it believes should be allowed under the GENIUS Act’s language. But this could come at the expense of the Clarity Act, which is the most important policy goal since the birth of crypto.
Regulations anyway
Would a lack of clarity mean the industry continues without U.S. regulation? Probably not, as US market regulators – the Securities and Exchange Commission and the Commodity Futures Trading Commission – are working on rules that will define their crypto jurisdictions. The downside, however, is that this would be done without the basis of a new law, so the rules would be reasonably easy to remove or revise in the event of future leadership changes at these agencies.
As if that wasn’t bad enough for crypto traders, there’s this: If they were to somehow capitulate on the stable yield of coins, and the bill advanced along party lines through the Senate Banking Committee (as it already was through the Senate Agriculture Committee), sacrificing the crypto industry provides no guarantee that the effort will be passed by the rest of the Senate.
The problem is that Democratic senators have asked for other important points in this bill, and so far those requests have gone unanswered. They want stronger defenses against illicit finance in crypto, particularly focused on the decentralized finance (DeFi) space, and some of Democrats’ past ideas have been criticized by the industry as DeFi death threats. They also want politically risky limits on the personal crypto business ties of senior government officials – and especially President Trump. And they demand that vacant Democratic seats be filled on the CFTC and the SEC.
None of these points constitute an insurmountable obstacle, but during the months of negotiations, they have not yet been removed. Some requests – such as committee appointments – would depend on the will of the White House.
In the meantime, the clock is ticking, in the 2026 Senate, for a major legislative achievement. Because this is a midterm election year, lawmakers will hardly work in the Senate after the end of July. And beyond the practicalities of the calendar, the proximity of a bloody campaign erodes the parties’ chances of coming together on a bill.
At this point, insiders on the crypto side of the negotiations have expressed frustration with the bankers’ unwavering stance, even as digital asset firms appear ready to abandon stablecoin rewards on accounts in which tokens are simply held (like a bank account). Yet people like Coinbase CEO Brian Armstrong (“We’re going to achieve a win-win-win outcome”) and Ripple CEO Brian Garlinghouse (predicting an 80% chance of success) have sought to maintain industry confidence.
That optimism appears to have kept Polymarket bettors favoring passage of the Clarity Act this year above a toss-up, currently at 70%.
In the coming weeks, the crypto industry may be forced to decide whether further sacrifice on stablecoin rewards is worth removing one of the main obstacles to moving a bill forward. And banks may have to decide whether they can cope with the GENIUS Act’s current treatment of stablecoins. So far, neither has moved and the tension is growing.
