April appears to be the reason the Cryptocurrency Clarity Act failed, but according to lobbyists and a congressional aide concerned about the slow progress of the market structure bill, a U.S. Senate committee hearing sometime in May may preserve the key market structure legislation as long as it can get a final vote from the full Senate before July.
There is no room on this year’s legislative calendar, but a Senate aide told CoinDesk that a delay of a few more weeks — to allow Republican Sen. Thom Tillis to finish discussions with bankers about concerns about stablecoin yields — is possible but has not yet pushed the effort past the point of no return. The aide also said that early negotiations on decentralized finance (DeFi) protections have been effectively resolved, with few additional obstacles in the committee approval process.
One of the main issues facing the crypto industry—if it can get past the stubborn hurdle of banking opposition to stablecoin rewards—is that the Senate Banking Committee hearing the bill needs to pass is just the first of many.
Here’s the scheduling maelstrom it’s currently grappling with: The Senate will essentially flee Washington in August and go into election mode until November’s congressional midterm elections. The committee is currently scheduled to spend about a dozen weeks in Washington before the election, during which it has some pressing matters to deal with, including the battle for funding for the Department of Homeland Security, the conflict over the Iran war, the debate over voter ID and resolving nomination issues such as President Donald Trump’s pick for Federal Reserve chairman Kevin Warsh.
If the bill is ultimately approved by the Senate Banking Committee, the text would need to be merged with the version passed by the Senate Agriculture Committee. The aide said the consolidation effort is a time buffer now being eaten away by these delays.
The final legislation is likely to be further revised as lawmakers add a final compromise on ethics issues, with Democrats looking to limit top government officials, most notably President Trump, from profiting from cryptocurrency interests. The aide said comments on this point are currently being circulated, but it will not appear in the Banking Committee’s version and will be added later. If they can resolve that dispute and address another requirement to appoint a full set of commissioners to oversee market regulation, the bill could win enough Democratic support to pass.
The House would then need to approve it again because it is significantly different from the version the House had already proposed last year. But as long as no further disagreements arise, the process is expected to end soon.
The final step, Trump’s signature, is expected to be the easiest, although he inserted some uncertainty in March when he said he would not sign any bills until legislation requiring voters to prove their citizenship before voting was approved.
If approved, the Digital Asset Market Clarity Act would be the second major crypto bill to become law, following last year’s Stablecoin Guidance and Establishing National Innovation in the United States (GENIUS) Act. But it’s the unresolved stablecoin issue in the Genius Act that has delayed progress on the Clarification Act since the start of the year, as bank lobbyists have garnered enough support from senators to bolster their concerns that stablecoin reward programs could approach deposit yields sufficiently to jeopardize banks’ business models.
The debate strayed far from the Clarification Act’s central goals, intensifying amid White House interference and tough rhetoric from cryptocurrency insiders. Coinbase has been at the forefront of taking a major hit if its stablecoin reward program is cut, with Chief Legal Office Paul Grewal posting another push on social media site X on Tuesday.
“You cannot argue against rewards for the sake of clarity,” he wrote. “Choose one or the other. It’s time to make a choice.”
While key Senate negotiators recently said they had reached an “agreement in principle” to move forward with a compromise, Republican Senator Tillis told reporters that early hopes of progress in April could be delayed until May. The White House has leaned toward a stance on cryptocurrencies, allowing for rewards that don’t look like interest on core bank deposits.
“It’s hard to explain any further lobbying by banks on this issue as being motivated by anything other than greed or ignorance,” Patrick Witt, Trump’s senior cryptocurrency adviser in the White House, said in a recent post on X. “Move on.”
In the current version, insiders say, the compromise has been steadily hovering around an approach that would prohibit any product that looks or acts like deposit insurance from paying out earnings but still allows companies like Coinbase to build rewards programs more akin to credit card incentives. But after asking representatives from the cryptocurrency and banking industries to review the language last month, lawmakers have been reluctant to release text that could spark further drama in negotiations.
“We are too close to let this effort fail,” Digital Chamber CEO Cody Carbone said in a statement to CoinDesk. “A price increase is necessary to move this forward. Three months on from the original plan, and given the progress on all issues, especially the Bipartisan Stablecoin Yield Agreement, now is the time.”
Every day without progress means the Clarity Act’s eventual success decreases. The next steps should be to schedule a markup hearing and share the text of the long-awaited bill that negotiators have been wrangling.
“We believe the odds of CLARITY being signed into law in 2026 are about 50-50, and possibly lower,” said a research report released this week by cryptocurrency investment firm Galaxy Project. “The uncertainty does not stem from any single issue, but from the large number of unresolved issues that must be resolved sequentially under severe time pressure.”
In other words, further outbursts among negotiators could lead to fatal delays, although the period after the November election may offer a last-ditch, low-odds chance. The so-called “lame duck” congressional session at the end of the year may be a time when the outgoing Congress can still take action, and more than one cryptocurrency insider has said that the hypothetical derailed Clarification Act may resurface by then.
While cryptocurrency lobbyists are eager to take immediate action on the legislation, the industry is playing the long game on the political front. Cryptocurrency political action committees have invested millions of dollars in growing their lists of bipartisan friends in Congress. Fairshake, the industry’s leading campaign finance agency, is careful to support members of both parties, many of whose political candidates will join next year’s Congress. If the Clarification Act becomes law by then, the industry may have other pressing legislative matters, possibly including tax reform and the creation of a federal Bitcoin reserve. .