The anticipated crypto market structure legislation, known as the CLARITY Act, faces significant doubt for a 2026 enactment. Opposition from the banking sector has intensified, particularly concerning stablecoin regulation. Banks have refused to support a White House compromise proposal, stalling negotiations ahead of midterm election campaigning.
Banks object to provisions allowing stablecoin issuers and crypto firms to offer yield-bearing products and customer rewards, fearing deposit flight and reduced lending capacity. Crypto companies argue these rewards are crucial for user acquisition and competitiveness.
The White House proposed a compromise allowing stablecoin rewards in limited peer-to-peer payment contexts, excluding idle balances. While crypto firms reportedly accepted this, banks still signal opposition, seeking stricter limits on reward-eligible activities.
Banking representatives believe they may secure more favorable terms with senatorial support for their position. The bill also contends with divisions over ethics and illicit finance provisions. Limited Senate floor time and the approaching midterm election campaign season present further obstacles. Experts suggest that if the bill isn't passed by July, reviving momentum before the elections will be challenging, with potential geopolitical developments adding further complexity.