Republicans Reopen Stablecoin Rewards Deal in Final CLARITY Push

The CLARITY Act seeks to create the first comprehensive US market structure for digital assets, defining when tokens should be treated as securities or commodities and dividing oversight between the Securities and Exchange Commission and Commodity Futures Trading Commission. Its significance extends beyond jurisdictional lines: negotiations over stablecoins and decentralized finance could determine whether Congress can deliver durable rules for an industry still operating under fragmented enforcement and guidance.

The Senate majority leader has moved to initiate a procedural vote, positioning the bill for a possible full-chamber vote as early as mid-September. The White House has pledged to push CLARITY across the “finish line” in September, but resistance is mounting. Senator Ruben Gallego has urged colleagues not to rush the measure, Galaxy cut its estimated odds of passage to 10%, and the CFTC and SEC are exploring joint regulatory steps should Congress fail to act.

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.

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 moving through the U.S. Congress seeks to establish a federal regulatory framework for digital asset markets. Whether stablecoins may pay yields to holders has implications for bank deposits, the payments market and crypto companies’ business models. JPMorgan said traditional banks fear deposit outflows, while the crypto industry wants to preserve yield-bearing structures, deepening the legislative dispute.

JPMorgan’s latest report said the probability of the CLARITY Act passing by December 31, 2026, has declined because of political resistance and the unresolved definition of “stablecoin yield.” The recent debate has centered on whether stablecoins should be allowed to pay interest, with the banking and crypto industries yet to reach a consensus. Available information on the event disclosed neither a specific market value nor a new voting date.

The Clarity Act is a key U.S. congressional effort to provide greater regulatory certainty for crypto assets. It aims to establish a federal regulatory framework for payment stablecoins and clarify rules governing issuance, reserve assets and regulatory jurisdiction. Because stablecoins are widely used in trading and payments, the bill’s trajectory will affect compliance costs and market strategies across the industry.

The U.S. House of Representatives recently held a markup session on the Clarity Act, reviewing and debating the bill provision by provision. Despite disputes among lawmakers over some clauses, the measure advanced to the next stages of the legislative process. Existing reports did not disclose the exact date of the meeting, the vote tally or any amounts involved. The timing of a full House vote and Senate consideration remains to be seen.

The CLARITY Act aims to clarify how oversight of crypto assets is divided between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. The dispute centers on whether the Blockchain Regulatory Certainty Act, or BRCA, should exempt DeFi developers who do not control user assets, determining whether software developers must assume the responsibilities of financial intermediaries.

As of July 19, 2026, bipartisan Senate negotiations had broken down over an amendment providing a BRCA enforcement exemption, despite claims that lawmakers had reached 99% agreement. The legislative window is only about eight weeks. The White House will hold talks with law enforcement groups, but no compromise has emerged on the key provision. The bill could move to separate votes by the two parties, making it unlikely to clear the Senate threshold.

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.

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.

The CLARITY Act aims to divide oversight of crypto assets between the US Securities and Exchange Commission and the Commodity Futures Trading Commission while strengthening the GENIUS Act’s restrictions on interest payments by stablecoin issuers. A central issue is whether platforms such as Coinbase may distribute rewards. Coinbase generated more than $1.3 billion in stablecoin-related revenue in 2025, and the rules could reshape platform business models and competition for bank deposits.

The US Senate Banking Committee released a revised 309-page draft on May 12 incorporating a compromise reached by Thom Tillis and Angela Alsobrooks on May 1. It would prohibit interest or yield paid solely for holding stablecoins while preserving activity-based rewards tied to transactions, payments and platform use. The committee approved the bill by a 15–9 vote on May 14 and sent it to the full Senate for consideration.

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.