By Blockchain Knight
As the core legislation for the United States to establish a comprehensive federal digital asset regulatory framework, the CLARITY Act is highly likely to be delayed until May for deliberation.
What was originally expected to be a breakthrough in late April has now become a test of whether Congress can finalize crypto regulatory rules in an election year.
The bill aims to resolve jurisdictional disputes in crypto regulation, clarifying the division of regulatory responsibilities between the SEC and CFTC. It passed the House of Representatives with strong bipartisan support in July 2025 by a vote of 294 to 134, but has been stuck in the Senate for months due to disputes over stablecoin yields.
The root of the controversy stems from a loophole left by the GENIUS Act. The GENIUS Act, which took effect in July 2025, established a 1:1 fiat reserve framework for stablecoins but did not clarify whether third parties or affiliated platforms could offer yield-like rewards to stablecoin holders.
This ambiguity has become a bottleneck for the progress of the CLARITY Act. Essentially, legislators need to decide whether stablecoins should only function as non-yielding payment tools or if yield-generating financial products should be allowed to be built around them.
White House data has intensified the disagreement between the two sides. A CEA report on April 8 showed that a complete ban on stablecoin yields would only increase bank loans by $2.1 billion (a 0.02% increase) but would cause a net welfare loss of $800 million for consumers. Furthermore, only $500 million of the new loans would flow to community banks, directly undermining the banking industry's core argument against stablecoin yields.
However, the American Bankers Association, along with regional groups, continues to lobby strongly for a complete ban on stablecoin-related yields (including from issuers, affiliates, and third parties), fearing it would divert bank deposits. They have even run advertisements and organized a petition signed by 3,200 bankers, claiming that lenient provisions could lead to a $6.6 trillion deposit shift.
The crypto industry firmly opposes the ban, arguing it would solidify traditional banks' monopoly on yield. Institutions like crypto investment firm Paradigm accuse the banking industry of intentionally delaying to kill the bill.
The deadlock between the two sides mirrors the impasse at the White House summit in February, where no compromise was reached.
The Senate's tight schedule further exacerbates the uncertainty of the bill's passage. Under pressure from the banking industry, senators are pushing the Senate Banking Committee to delay consideration. Starting in May, the Senate will face state work and holiday recesses. After August, the legislative focus will shift to the midterm elections, leaving very little time for bill deliberation and reconciliation with the House version.
Currently, the decentralized prediction platform Polymarket shows that the probability of the bill passing this year has dropped from 82% in February to 48%.
The future direction of the bill depends on two factors: first, whether a compromise can be reached on stablecoin yields that both plugs the so-called "loophole" for banks and preserves development space for the crypto industry; second, whether deliberation time can be secured before the election season.
If the dispute continues, the bill may become unfinished business in an election year. If a consensus can be reached quickly, there is still a possibility of passage even if deliberation is delayed until May.
Currently, the escalation of bank lobbying, the White House's rebuttal, and the Senate's silence all point to one key issue: the finalization of the stablecoin yield provision will determine the ultimate fate of this crucial crypto legislation.
