US lawmakers push stablecoin deal to revive CLARITY Act

US lawmakers are still trying to revive the stalled CLARITY Act, a major proposal designed to create clear rules for the cryptocurrency industry. Banks rejected a White House-backed idea for stablecoin rewards, claiming that such products could compete with traditional bank deposits, and negotiations just encountered another obstacle. The disagreement has kept the bill stuck in the Senate and raised fresh doubts about whether Congress can move it forward before the 2026 midterm elections, as reported by several media outlets.

At its core, the CLARITY Act aims to end years of regulatory confusion by defining how digital assets should be overseen in the United States. The plan would provide cryptocurrency companies more precise information on which regulations apply by dividing responsibility between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Critics caution that hasty regulation could erode consumer safeguards in a field that is expanding quickly, while supporters claim that this certainty could spur investment and innovation.

Why bill is stalled in senate

In July 2025, the CLARITY Act passed the US House of Representatives with a bipartisan vote of 294–134, a rare level of agreement on financial technology legislation. Lawmakers from both parties supported the bill, recognising that digital assets are becoming a permanent part of the financial system.

However, differences over stablecoin yield caused the Act to stall in the Senate. Whether cryptocurrency platforms should be permitted to provide incentives or interest for holding stablecoins is the main point of contention. Banks contend that these incentives might divert deposits from conventional accounts, making it more difficult for them to lend money and boost the economy. Analysts warn that hundreds of billions of dollars could shift into stablecoins if yield products become widespread, raising concerns about financial stability.

What stablecoin yield means

Stablecoins are digital tokens that are typically linked to a currency such as the US dollar. Because of their stability, they can be used in both traditional and cryptocurrency markets. Numerous systems provide incentives for utilising or possessing stablecoins, such as yield from underlying assets, staking advantages, or transaction incentives.

Banks see these rewards as a direct challenge to their model, since deposits are central to how they fund loans and support economic activity. If large amounts of money shift into stablecoins offering higher yields, banks could face liquidity problems and broader risks to financial stability.

Proposed limited yield solution

In an attempt to break the impasse in the Senate over the CLARITY Act, legislators proposed a “limited yield” strategy. This compromise would have made it possible for cryptocurrency platforms to reward certain acts, such as transactions or payments, rather than just storing stablecoins.

The proposal was rejected by major banking associations, who claimed that even little rewards may still operate as interest and pull savings away from banks. Negotiations came to a standstill as the American Bankers Association officially rejected the concept. As a result, stablecoin yield continues to be the primary barrier, and the bill is still stalled in the Senate Banking Committee.

Midterm clock for CLARITY Act

Ahead of the 2026 midterm elections, the Senate has a busy schedule for the CLARITY Act. The most practical time for lawmakers to advance legislation is between March and May. The Senate Banking Committee may move the bill forward during this time if negotiators can rapidly come to an agreement. Missing that window would leave only smaller chances in early summer or September, when campaigning and the proximity to the election make passing significant legislation far more difficult.

If the bill fails to pass before the midterms, the United States will likely continue operating under its current patchwork of crypto regulations. The industry would remain in a state of legal uncertainty because of ongoing disputes between regulators and businesses on whether specific digital tokens are securities. Stablecoin competition might not put as much immediate pressure on banks, but investors and consumers would still be left in the dark about the classification and regulation of digital assets.