CLARITY Act 2026: Breaking the Deadlock in Stablecoin Revenue Legislation, U.S. Crypto Regulation Reaches a Turning Point

On April 14, 2026, Patrick Witt, Executive Director of the White House Digital Asset Presidential Advisory Committee, confirmed that a compromise has been reached regarding the long-term stablecoin yield controversy surrounding the “Digital Asset Market Clarity Act.” This breakthrough removes a core obstacle to advancing the bill in the Senate Banking Committee, which plans to hold a markup session in late April. Since the CLARITY Act was passed by the House in July 2025 with a vote of 294 to 134, it has been shelved for nearly a year. This compromise signifies that U.S. cryptocurrency regulation legislation is entering its final sprint, and its outcome will profoundly impact the structure of the stablecoin market, the operational framework of exchanges, and the federal regulation boundaries of digital assets.

What are the core disagreements over stablecoin yields?

The issue of stablecoin yields was once the biggest stumbling block in advancing the CLARITY Act in the Senate. The banking sector has long worried that allowing stablecoin issuers or third parties to offer “passive yields”—that is, earning returns simply by holding stablecoins—would divert deposits from traditional banks and erode the core deposit and loan business of community banks. Although the GENIUS Act passed in 2025 established a reserve and basic regulatory framework for payment stablecoins, it left ambiguity regarding “yields,” leading to repeated delays in the Senate Banking Committee’s review of the CLARITY Act. After the originally scheduled hearing was canceled in January, negotiations stalled, and banking lobbies successfully persuaded some senators that offering bank-like interest to stablecoin holders would pose systemic risks.

How does the compromise balance the interests of banks and the crypto industry?

In mid-March, Senators Thom Tillis (Republican) and Angela Alsobrooks (Democrat) reached a principled agreement with the White House, establishing the core framework of the compromise: banning “passive yields” from simply holding stablecoins but allowing rewards linked to activities such as payments, transfers, or platform usage. Witt called this “a significant milestone,” emphasizing that resolving the stablecoin yield issue is a prerequisite for advancing the entire bill, and the current plan is expected to remain stable. The compromise essentially distinguishes between two yield models—risk-free passive yields are prohibited, while incentive-based yields related to on-chain economic activities are retained. This distinction finds an institutional balance between protecting the deposit base of banks and maintaining the competitiveness of crypto products.

What role has the White House Economic Advisory Committee’s data analysis played?

The White House Economic Advisory Committee recently released a research report providing key data support for the compromise. The report quantifies the impact of stablecoin yields on the banking system: banning stablecoin yields would only increase U.S. bank loans by about $2.1 billion, a mere 0.02% increase, and the previously claimed risk of deposit outflows was greatly overestimated. The report notes that even in extreme scenarios, the loan increase caused by yield bans would mainly concentrate in large banks, with community banks benefiting very little. This conclusion provides an empirically verifiable basis for political compromise in legislation, giving bipartisan lawmakers grounds to make concessions on yield provisions. However, the American Bankers Association responded promptly, claiming the report has flaws and that stablecoin yields could still pose risks to community banks, indicating some reservations within the banking industry about advancing the bill.

What other unresolved disagreements remain besides stablecoin yields?

Witt pointed out that negotiations are nearing completion, with many disputes close to resolution. Besides stablecoin yields, major disagreements include measures to protect against illegal financial activities in decentralized finance (DeFi) and an ethical clause proposed by Democrats to prohibit high-ranking government officials, including the President, from profiting from the crypto industry. Regarding specific regulatory frameworks for DeFi, draft language tends to differentiate between non-custodial protocols and self-custody smart contracts versus custodial intermediaries, focusing prudential regulation on centralized intermediaries and stablecoin issuers. This “dual-track” approach aims to protect the core innovation of DeFi while concentrating systemic risk management on entities that can be regulated. Witt did not disclose which issues have reached consensus but stated that “significant progress has been made behind the scenes” and remains optimistic about fully resolving these issues.

What does the Senate Banking Committee’s markup session in late April mean?

According to the current schedule, Senate Banking Committee Chair Tim Scott plans to hold a markup session in the latter half of April. If successful, the bill will proceed to full Senate consideration. This timing is critical—Senate adjourned for Easter on April 13 and will resume full sessions, effectively starting the legislative countdown. Alex Thorn, head of Galaxy Research, explicitly warned that if the bill fails to pass the committee review in April, the likelihood of completing legislation within 2026 will plummet. Procedurally, before the bill can be signed into law, it must go through: the committee markup, a full Senate vote with at least 60 votes, coordination with the Senate Agriculture Committee version, coordination with the House’s July 2025 version, and finally, delivery for presidential signature—all within a limited timeframe. Senator Cynthia Lummis issued an urgent call, warning that if it does not pass this year, the legislative process could be delayed until after 2030. Treasury Secretary Scott Bessent also publicly urged Congress to act swiftly, warning that the lack of a clear legal framework could accelerate the outflow of talent and capital from the crypto industry to crypto-friendly jurisdictions like Singapore and Abu Dhabi.

How will the bill reshape the stablecoin market landscape after passage?

The core transformation of the CLARITY Act involves establishing a unified federal minimum standard: all payment stablecoin issuers, regardless of their state licensing status, must meet federal reserve, capital, and transparency requirements. Under the current framework, issuers are subject to a patchwork of state-level money transfer licenses, lacking a unified federal regulatory baseline. This ambiguity has long been a barrier to large-scale institutional adoption. The bill also aims to clarify that spot crypto trading is primarily regulated by the CFTC, resolving long-standing jurisdictional conflicts between the SEC and CFTC. For the stablecoin market, the compromise will reshape the competitive landscape: with passive yield models banned, activity-linked incentives tied to payments and usage will become the main means of maintaining user engagement. Major stablecoin issuers like Circle can partially pass on reserve interest income to users through activity incentives, helping to sustain the appeal of products like USDC to both institutional and retail users. Market data shows that after the compromise was announced, Circle’s stock price surged by about 12%, reflecting investors’ positive expectations for the bill’s progress.

Summary

The compromise on stablecoin yield disputes in the CLARITY Act marks a turning point from confrontation to pragmatic coexistence between banks and the crypto industry. Data analysis from the White House Economic Advisory Committee provides a verifiable empirical basis for legislation, and the Senate Banking Committee’s late April markup will be a key moment determining the bill’s fate. However, the timeline is extremely tight—if the bill cannot complete the Senate process before the midterm election cycle, it may face long-term shelving, which would be a setback for what is seen as a milestone in U.S. crypto regulation.

FAQ

Q: What stage is the CLARITY Act currently in?

The bill was passed by the House in July 2025 with a vote of 294 to 134 and is now awaiting a markup review by the Senate Banking Committee. If the committee passes it smoothly in late April, it will proceed to full Senate vote, then coordinate with the House version and be sent to the President for signature.

Q: What are the specific details of the stablecoin yield compromise?

The core plan is to prohibit “passive yields” from simply holding stablecoins but allow rewards linked to activities such as payments, transfers, or platform use. This aims to balance banking sector concerns over deposit safety with the crypto industry’s need to maintain product competitiveness.

Q: What are the consequences if the Senate markup session in late April does not occur as scheduled?

Galaxy Research pointed out that if the bill fails to pass the committee review in April, the probability of completing legislation within 2026 will sharply decline. Senator Lummis warned that missing this window could push the legislative process into after 2030.

Q: How does the CLARITY Act relate to the GENIUS Act?

The GENIUS Act (passed in 2025) established a reserve and basic regulatory framework for payment stablecoins but left ambiguity regarding “yields.” The CLARITY Act further clarifies yield rules and addresses jurisdictional conflicts between the SEC and CFTC based on this foundation.