If you break down the roadblock to the cryptocurrency industry’s top goal in Washington — the CLARITY Act legislation — the part of the debate that the industry can control is narrow: stablecoin rewards.
This isn’t the only issue that could stand in the way of the bill ultimately establishing a tailor-made legal basis for the U.S. cryptocurrency market, but it’s one where industry players have a strong voice. Companies like Coinbase have been vigorously defending this area of business, hoping to continue to incentivize customers to use stablecoins on their platforms.
But Wall Street banking lobbyists have stepped in, arguing that earning income from stablecoin accounts is a lot like earning interest from savings accounts, and if the former kills the latter, then the death of the deposit business will mean the death of bank lending. This argument was shared by enough lawmakers from both parties to block the Senate’s Digital Asset Market Clarity Act.
As time passes, the resulting gridlock will become increasingly difficult to break, until the Senate’s own calendar weirdness can effectively push the entire mess to 2027.
Gain the upper hand?
So far, the cryptocurrency side has thought it had the upper hand, as the enacted crypto bill — the Stablecoin National Innovation Guidance and Establishment Act in the United States (GENIUS) — appears to allow third-party platforms like Coinbase to offer rewards pegged to other issuer tokens, such as Circle’s. However, confidence in the crypto world is somewhat shaken when a newly proposed rule by the Office of the Comptroller of the Currency, which implements GENIUS, concluded that the relationship may violate the intent of the law.
The last time cryptocurrency and banking industry negotiators sat down with White House officials, President Donald Trump’s cryptocurrency advisers appeared to be leaning toward a compromise that would allow for some rewards — not just for holding stablecoins, but for actually using them for transactions and supporting crypto infrastructure. Cryptocurrency insiders are confident of their influence, have the geniuses behind them, and have certain rewards favored by the White House.
But bank representatives don’t necessarily see the White House in the driver’s seat, since the White House does not have a vote in advancing the Senate bill. Although the White House has set an unofficial (unmet) deadline for compromise at the end of February, bankers have yet to raise their hands and reverse their previous stance that virtually all categories of awards need to be banned.
So where does this leave things?
Banks can hold out, and if they continue to view stablecoin rewards as an existential threat to the traditional financial system and Main Street lending, it could come at the fatal cost of the Clarification Act to keep their allied lawmakers on their side. The risk they face is that the Genius Act remains the law of the land at this point. The OCC’s latest work may help bolster their confidence that strict award limits will be in place, but the final agency rules will have to be interpreted very stringently.
The cryptocurrency industry could also hold out, and if it can successfully lobby against the OCC’s proposed rules, it could still seek to preserve the stablecoin rewards program it believes should be allowed under the language of the Genius Act. But that may come at the expense of the Clarification Act, the most important policy goal since the birth of cryptocurrencies.
Either way the regulations
Does the lack of clarity mean the industry will continue to exist without U.S. regulation? Probably not, as U.S. market regulators — the Securities and Exchange Commission and the Commodity Futures Trading Commission — are developing rules to define their cryptocurrency jurisdictions. The downside is that this would be done without a new legal basis, so the rules could easily be stripped away or modified during future leadership changes at these agencies.
As if that wasn’t enough for crypto negotiators to consider, here’s the thing: If they offer some sort of concession on stablecoin yields, and the bill passes the Senate Banking Committee along party lines (as it already did through the Senate Agriculture Committee), the crypto industry’s sacrifice doesn’t guarantee that the effort will pass the rest of the Senate.
The problem is that Democratic senators have asked for some other important points in the bill, but so far, those requests have gone unanswered. They want stronger defenses against illicit finance in the cryptocurrency space, especially focused on the decentralized finance (DeFi) space, and some of the Democrats’ past ideas have been blasted by the industry as DeFi death threats. They also want to politically limit the personal cryptocurrency business relationships of senior government officials, most importantly President Trump. They are asking to fill vacant Democratic seats on the U.S. Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission.
None of these issues are insurmountable obstacles, but they have yet to be cleared during months of negotiations. Some requirements — such as committee nominations — will depend on the White House’s wishes.
Meanwhile, time has passed for major legislative achievements in the Senate in 2026. Since this is a midterm election year, members will hardly be working in the Senate after the end of July. In addition to practical scheduling issues, the approach of a heated campaign has undermined the chances of all parties agreeing on a bill.
At this stage, insiders on the cryptocurrency side of the negotiations have expressed frustration with bankers’ unwavering stance, even as digital asset businesses appear ready to waive stablecoin rewards for accounts that only hold the tokens, such as bank accounts. Still, the likes of Coinbase CEO Brian Armstrong (“We’re going to have a win-win situation”) and Ripple CEO Brian Garlinghouse (prediction with an 80% chance of passing) are trying to maintain industry confidence.
That optimism appears to have Polymarket bettors favoring passing the Clarity Act this year at a higher rate than a coin flip, currently at 70%.
In the coming weeks, the crypto industry may be forced to decide whether some kind of further sacrifice in stablecoin rewards is worth it, removing one of the main obstacles to advancing the bill. Banks may have to decide whether they can cope with the Genius Act’s existing treatment of stablecoins. So far, neither side has taken action and tensions are rising.
