CLARITY Act Legislative Sprint: Late April is the Final Window, Stablecoin Yield Provisions Decide Success or Failure

On April 13, 2026, the U.S. Senate concluded a two-week Easter recess and resumed full session. With this calendar milestone reached, the Digital Asset Market Clarity Act (CLARITY Act) officially enters the final sprint of the Senate legislative process.

The Senate Banking Committee plans to hold a markup in the second half of April to review, amend, and vote on the bill. If the bill fails to pass committee review in April, Galaxy Research head Alex Thorn explicitly warns that the probability of completing legislation within 2026 will drop to “extremely low.” Procedurally, before the bill is officially signed into law, five steps must be completed within less than two months: committee line-by-line review, 60 votes in the Senate, coordination with the Agriculture Committee version, coordination with the House version from July 2025, and final delivery for presidential signature.

Why late April is the final window for CLARITY legislation

In Washington’s legislative calendar, time is the strictest hard constraint. After the Senate reconvenes, the target window for the Banking Committee markup is locked in the last two weeks of April, controlled by Chairman Tim Scott. However, as of now, Scott has not announced an official markup date, meaning the bill’s progress remains uncertain.

Two key calendar milestones determine the irreversibility of this window. First, the Memorial Day recess begins on May 21. If the bill does not make significant progress in the Senate before then, the legislative process will fall into the political cycle of midterm elections. Second, with the midterm elections approaching in November 2026, Senator Bernie Moreno explicitly warns that if the bill does not advance before May, deliberations could be delayed until after the midterms. As scholar Sun Yuanzhao points out, if the bill cannot pass before the summer recess (before August), it is “very likely to die in the cradle.”

Senator Cynthia Lummis issued an even more urgent warning: if it cannot pass this year, the legislative process might be pushed beyond 2030. This judgment reflects the structural compression of legislative windows caused by election cycles—once the midterms are over, the balance of power in Congress may shift, and the political priority of crypto legislation will be re-ordered.

How profit clause disputes are reshaping the bill’s game

The biggest obstacle to advancing the CLARITY bill in the Senate is the ongoing controversy over the passive yield payment mechanism for stablecoins. The banking sector fears that allowing stablecoin issuers or third parties to provide “passive yields” (i.e., earning returns simply by holding USDC or other stablecoins) could divert traditional bank deposits and impact lending and borrowing fundamentals. The Independent Community Bankers of America warned that small banks could face up to $1.3 trillion in deposit outflows.

The crypto industry’s stance is quite different. Platforms like Coinbase believe restricting stablecoin yields is essentially banking protectionism. Coinbase’s revenue from stablecoins accounts for about 20% of its total income, so the profit clause directly impacts its business model. In January 2026, Coinbase CEO Brian Armstrong publicly stated, “We’d rather have no bill than a bad bill,” actively resisting the committee markup process at that time.

This deadlock saw a key breakthrough in April. On April 10, Armstrong officially announced support for the CLARITY Act, reversing his previous opposition. One driver of this shift was a research report released by the White House Council of Economic Advisers (CEA) on April 8. The report concluded that a comprehensive ban on passive yields offers limited actual protection for bank deposit stability—providing a political basis for a compromise.

The currently emerging Tillis-Alsobrooks compromise framework is central to the profit clause debate. Its core logic is: prohibit crypto platforms from paying interest on stablecoin holdings, but allow activity incentives and reward programs linked to payment behavior and platform use. This aims to balance banking concerns over deposit outflows with the crypto industry’s desire to maintain business models.

The White House economic report’s latest assessment of yield ban effects

The CEA’s report further supports this compromise direction. It estimates that banning stablecoin yields would only increase U.S. bank loans by about $2.1 billion, a mere 0.02% increase, with most of that growth flowing to large banks rather than community lenders. The report explicitly states: “It is fundamentally unrealistic to seek positive social welfare effects through banning yields. In short, yield bans do little to protect bank loans but deprive consumers of the benefit of earning competitive returns on stablecoin holdings.”

This data provides a strong rebuttal to banking industry lobbying. In 2025, large banks spent approximately $56.7 million lobbying against stablecoin yield clauses. Even under the most aggressive assumptions by the CEA—where the stablecoin market grows sixfold—their loan growth is only projected at 6.7%. The American Bankers Association responded that the White House report has flaws and still insists that stablecoin yields pose risks to community banks, but overall, bipartisan compromise has significantly reduced legislative resistance.

How the CLARITY bill will bring structural changes to crypto asset regulation

The CLARITY Act was passed in the House of Representatives in July 2025 with a high vote of 294-134, including 78 Democratic votes, demonstrating broad bipartisan support far exceeding previous similar bills. On the same day, the GENIUS Act was signed into law by the President, establishing a federal regulatory framework for USD-backed payment stablecoins.

The core structure of the bill includes three aspects: first, classifying most spot crypto trading as commodities regulated by the CFTC, ending the long-standing jurisdictional conflict between SEC and CFTC; second, establishing clear reserve, disclosure, and compliance rules for stablecoin issuance; third, clarifying regulatory boundaries for digital assets to reduce enforcement-driven regulatory uncertainty. Former White House crypto czar David Sacks said the CLARITY Act will provide a “roadmap” for all digital assets.

From an industry perspective, this regulatory clarity is expected to reduce compliance uncertainty and promote institutional capital entry into crypto markets. Treasury Secretary Scott Bessent urged Congress to send the bill to the President’s desk, calling it a key step to “bring the financial future back to America.” For stablecoin issuers, the final wording of the bill will directly influence their business valuation and models.

How the midterm elections will compress the political window for crypto legislation

The 2026 midterm elections are the biggest political variable affecting the CLARITY Act’s prospects. Currently, the Senate has 53 Republican seats and 47 Democratic seats (including 2 Independents). Major legislation typically requires 60 votes to overcome procedural hurdles, meaning that even if all Republicans vote in favor, 7 to 10 Democrats must support.

As the midterms approach, congressional agendas will shift increasingly toward campaigning. By October, lawmakers will focus more on elections than legislation. If Democrats regain control of both the House and Senate in November, the difficulty of passing the bill afterward could significantly increase. Treasury Secretary Bessent has previously emphasized that passing the bill quickly and delivering it to the President before the spring (late March to late June) is crucial. This timing aligns closely with the current April window—late spring is the last critical point for legislative momentum.

The potential structural impacts of passing the bill on the crypto industry

The potential passage of the CLARITY Act marks an important step toward regulatory certainty in the U.S. crypto market, which could attract institutional capital but also impose new compliance burdens. Internally, effects are mixed: retail investors face risks from adjustments to stablecoin interest models and RWA investments but gain protection through customer fund segregation; institutions see opportunities for compliant entry; project developers will need to bear different compliance costs depending on whether they are classified as securities or commodities.

For stablecoin issuers, the final wording of the profit clause will directly influence their business models. Circle’s USDC circulation has approached or exceeded $78 billion. Whether its reserve interest income can be partially passed through via activity incentives will determine USDC’s attractiveness to institutions and retail users. If the Tillis-Alsobrooks compromise framework is ultimately codified, Circle can maintain a reward ecosystem based on USDC usage within a compliant framework; conversely, if the banking sector successfully narrows the scope of activity incentives at the final stage, issuers’ revenue structures will face direct compression.

From a broader perspective, the CLARITY Act also carries the intention of consolidating the dollar’s position in digital finance through stablecoins. Clarifying the regulatory framework means the crypto market will enter a new phase—rising compliance costs will accelerate market reshuffling, but traditional institutions’ entry will deepen the industry’s capital base.

Summary

The CLARITY Act is in the final window of the Senate legislative process. The April banking committee markup is a critical node determining the bill’s fate; missing this window would almost certainly mean legislative failure in 2026. The profit clause for stablecoins is the core controversy, with the emerging bipartisan Tillis-Alsobrooks compromise—banning passive yields but allowing activity incentives—serving as the basis for cross-party consensus. Political pressures from the midterm elections further compress the legislative timeline, making late April decisions irreversible. If passed, the bill will establish a clear regulatory framework for U.S. crypto markets, delineate SEC and CFTC jurisdiction, and have profound impacts on stablecoin issuance, exchange compliance, and institutional participation.

FAQ

Q: What stage is the CLARITY bill currently in?

A: The bill was passed in the House in July 2025 with a high vote of 294-134 and is now under review by the Senate Banking Committee, with a markup and vote planned for late April.

Q: Why is late April a critical window?

A: After the Senate reconvenes on April 13, the markup window is locked in the last two weeks of April. After the Memorial Day recess on May 21, the midterm elections will dominate the congressional agenda, greatly increasing the difficulty of advancing the bill.

Q: Why is the stablecoin yield clause a focal point of controversy?

A: The banking sector fears that allowing stablecoin holders to earn yields could lead to deposit outflows, with estimated risks up to $1.3 trillion; the crypto industry sees this as protectionism, and restricting yields would weaken DeFi competitiveness.

Q: What is the specific content of the Tillis-Alsobrooks compromise framework?

A: It prohibits crypto platforms from paying interest on stablecoin holdings but allows activity incentives and reward programs linked to payment behavior and platform use.

Q: How many votes are needed in the Senate for the bill to pass?

A: Major bills generally require 60 votes to overcome procedural hurdles. The current Senate has 53 Republicans and 47 Democrats (including 2 Independents).

Q: What are the implications if the bill fails to pass in late April?

A: Legislation could be delayed until after the midterm elections. If the congressional power balance shifts, passing the bill could become even more difficult.