Mizuho Says CLARITY Act May Hurt Circle in Long Run

As the United States advances the Digital Asset Market Clarity Act, or CLARITY Act, to regulate stablecoins, the boundary between traditional finance and cryptocurrency is being redrawn. Banks fear that if the bill allows issuers to offer interest or yield indirectly, payment stablecoins would effectively become substitutes for deposits. That would threaten traditional banks' funding sources and could weaken the banking system's lending capacity, prompting strong resistance and calls for amendments from the traditional financial sector.

On July 13, 2026, the American Bankers Association, the Independent Community Bankers of America and other groups sent a joint letter to Senate leaders seeking revisions to ambiguous stablecoin yield language in Section 404 of the bill. The ICBA warned that failure to close the loophole could drain as much as $1.3 trillion in bank deposits and reduce lending capacity by $850 billion. The bill passed a Senate committee in May, with a hearing scheduled for July 17.

The CLARITY Act seeks to define how oversight of crypto assets should be divided between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, making it a key piece of legislation for establishing federal market rules. The bill remains stalled over stablecoin yield provisions, with the crypto and banking industries still divided over interest, rewards and the impact on competition for deposits.

Republican Senator Thom Tillis urged the Senate Banking Committee to delay its review until May to allow more time for negotiations. The committee subsequently scheduled a markup for May 14, while Chairman Tim Scott had hoped to finish the process by May 21. However, the July 4 deadline passed without the bill clearing the hurdle, raising concerns that it may not pass before the November midterm elections.

US cryptocurrency regulation has long relied on securities and commodities laws as well as regulators’ discretion, leaving the boundaries around token classification and developer liability unclear. Nonprofit advocacy group Coin Center says the CLARITY Act is intended to establish a framework for classifying digital assets and provide statutory protections for noncustodial blockchain developers, determining whether the industry can operate under predictable rules.

As of July 20, 2026, the CLARITY Act and related blockchain legislation remained stalled in the US Senate, with provisions including stablecoin yield among the disputed issues. No specific amount is involved. Coin Center warned that unless Congress explicitly limits regulatory discretion, future administrations could change their enforcement stance and take tougher measures against cryptocurrency companies and developers.