JPMorgan Says Stablecoin Yield Dispute Makes CLARITY Act Unlikely to Pass This Year

The U.S. Senate’s 616-page Digital Asset Market Clarity Act proposal seeks to establish a federal market structure for digital assets and delineate oversight between the Securities and Exchange Commission and Commodity Futures Trading Commission. Its stablecoin provisions address a central dispute between banks and crypto firms: whether payment tokens should compete with deposits. The draft treats payment stablecoins as uninsured digital cash for transactions and settlement, not as deposits or investment products.

An analysis published July 22 said the proposal would bar crypto platforms from paying U.S. customers interest solely for holding payment stablecoins. Rewards could remain permissible when linked to payments, remittances, liquidity provision, collateral, staking, governance or loyalty programs. If enacted, the SEC, CFTC and Treasury Department would have one year to jointly clarify the boundary and publish a nonexclusive list of permitted programs. Knowing and willful violations could draw civil penalties of as much as $5 million per violation.

The CLARITY Act aims to establish regulatory responsibilities for the U.S. digital asset market. The dispute centers on whether Section 404 can prevent stablecoins from effectively paying interest through rewards. Banks fear funds could move from FDIC-insured deposits into stablecoins, weakening lending for mortgages, small and medium-sized businesses, and agriculture. The Treasury Department estimates that as much as $6.6 trillion in deposits could be at risk of outflows.

On July 13, the American Bankers Association, the Independent Community Bankers of America and 76 state banking associations urged bipartisan Senate leaders to tighten Section 404. The bill passed the Senate Banking Committee by a 15–9 vote on May 14, but no date has been set for a floor vote. That uncertainty could make it difficult to enact the legislation before the November 2026 midterm elections.

The U.S. CLARITY Act seeks to establish a market structure and division of regulatory responsibilities for digital assets. The crypto industry sees it as crucial legislation for clarifying rules governing securities, commodities and trading platforms. Its progress will affect not only compliance pathways for U.S. businesses but also competition between stablecoin rewards and bank deposits, as well as the future boundaries of DeFi regulation.

Galaxy Digital head of research Alex Thorn recently cut his estimate of the bill's chances of passing in 2026 to 60%. He warned that committee consideration must be completed by the end of April, with the measure reaching the Senate floor in May; if that window is missed, its chances of passing this year would be extremely low. Wintermute's Ron Hammond had previously put the probability at just 30%, highlighting a compressed legislative calendar and opposition from the banking industry as the main obstacles.