The Trump administration pushes for CLARITY Act legislation sprint: Stablecoin yields become the final obstacle

In April 2026, U.S. cryptocurrency regulation legislation reaches a critical moment. President Trump tweeted in support of the CLARITY Act on April 19, and Treasury Secretary Scott Bessent simultaneously stated that the bill would make the United States the “most comprehensive cryptocurrency regulatory country in the world,” calling for the Senate Banking Committee to immediately begin review. The executive and financial systems jointly exerted pressure over the same weekend, a first in the history of crypto legislation.

However, since the bill was passed in the House of Representatives with a vote of 294 to 134 in July 2025, it has been stuck in the Senate Banking Committee for over 270 days. Galaxy Digital research director Alex Thorn warned that if review is delayed until after mid-May, the likelihood of passing in 2026 will sharply decline, currently estimated at about 50% or even lower.

Ending the Jurisdiction Dispute Between SEC and CFTC

The core goal of the CLARITY Act is to end the long-standing “dual jurisdiction” dilemma in U.S. digital asset regulation—where the same token might be targeted by both SEC and CFTC, or neither. The bill establishes a classification framework based on the asset’s lifecycle, dividing digital assets into two main categories: “digital commodities” and “investment contract assets.”

Specifically, assets that are sufficiently decentralized and no longer reliant on a single issuer are classified as digital commodities, under the exclusive jurisdiction of the CFTC, covering anti-fraud enforcement and oversight of exchanges and brokers. Assets in early stages with clear financing attributes are regulated by the SEC, responsible for disclosure and investor protection. The bill also sets quantifiable criteria: for a system to be recognized as a digital commodity under CFTC jurisdiction, it must be demonstrated that the issuer and related parties held no more than 20% of voting rights over the past 12 months. This calculable technical threshold replaces the subjective Howey test, providing industry with a predictable compliance path.

Why Do Stablecoin Yield Terms Become a Focal Point in the Battle?

During the bill’s progression, the controversy shifted from asset classification to a more specific issue—stablecoin yield terms. Currently, stablecoin issuers typically allocate reserves into low-risk assets like short-term U.S. Treasuries to earn interest, then indirectly distribute these to users via platforms as “rewards” or “rebates,” creating a “pseudo-interest transmission chain.”

The Senate revised draft imposes substantive restrictions on this. According to the disclosed draft text, digital asset service providers will be prohibited from offering passive yields on stablecoin balances or arrangements that are economically equivalent to bank deposit interest. However, incentives related to on-chain activities like payments and transfers are still permitted, but SEC, CFTC, and the Treasury will jointly develop rules to define the boundaries of legal incentives and indirect interest. The core logic of this approach is to draw a legal red line between stablecoins as “payment tools” and “savings products.”

How Banking Lobbying Delays the Legislation

Banking opposition to the stablecoin yield clause is the most direct reason for the bill’s delay in the Senate. The core argument from banks is that allowing stablecoin platforms to pass reserve interest to users as yields effectively enables products similar to bank deposits without the need to meet capital, liquidity, or consumer protection requirements, risking systemic deposit outflows.

Senators Thom Tillis and Angela Alsobrooks reached a principled compromise after over two months of negotiations in late March, but the banking industry reversed at the last moment. The North Carolina Bankers Association organized member banks to call Tillis’s office en masse to pressure, expanding lobbying efforts to other banking committee members. On April 17, Tillis announced that the compromise text would not be released for now, citing uncertain review timelines, and postponed the Senate Banking Committee markup from April to May.

Patrick Witt, Executive Director of the White House Digital Asset Committee, publicly criticized the continued lobbying by banks, saying, “It’s hard to interpret further lobbying as anything other than greed or ignorance.” An analysis report released by the White House Council of Economic Advisers on April 8 estimated that banning passive yields on stablecoins would only increase total U.S. bank loans by about $2.1 billion annually, while causing consumers to lose about $800 million in returns each year—empirical evidence that weakens the banks’ opposition arguments at the policy level.

Industry Divisions: Why Coinbase Publicly Opposes

Banks are not the only stakeholders. Coinbase’s Chief Legal Officer Paul Grewal explicitly told lawmakers that they cannot support the CLARITY Act while opposing crypto rewards. Bloomberg Intelligence estimates that revenue related to stablecoins accounts for about 19% of Coinbase’s total revenue in 2025; any restrictions on yield terms would directly impact its balance sheet.

Notably, Coinbase CEO Brian Armstrong publicly endorsed the CLARITY Act on April 10, reversing his previous opposition. This shift indicates that, despite disagreements over yield terms, industry leaders recognize that missing the 2026 legislative window carries far greater risks than the cost of the terms themselves. Additionally, provisions in the Senate draft restricting the tokenization of traditional financial assets and explicitly excluding RWA (Real-World Assets) from digital commodities have sparked broader industry concerns.

Does Trump’s Personal Conflict of Interest Affect the Legislation?

Another sensitive aspect surrounding the CLARITY Act is the ethical controversy over Trump’s involvement in crypto assets. The meme coin $TRUMP issued by the Trump family has drawn ongoing criticism from Democrats, with some lawmakers pushing to include moral clauses in the bill that restrict government officials and their families from profiting from crypto assets during their tenure.

Public reports indicate that during the 2025 bill review, Democratic lawmakers repeatedly questioned whether Trump’s involvement in cryptocurrencies could constitute a conflict of interest. If Democrats regain control of the House after the midterm elections, such moral controversies could become political obstacles to the final vote. However, currently, the White House’s strong push for the bill suggests a unified stance within the administration, and moral clauses are more viewed as bargaining chips in bipartisan negotiations rather than outright veto factors.

Legislative Timeline: Why May Is the Final Window

Procedurally, the CLARITY Act’s markup in the Senate Banking Committee has been postponed from April to mid-May. After that, it must go through sequential steps: a full Senate vote of 60 votes, coordination with the Agriculture Committee version, reconciliation with the House version, and finally, presidential signing.

Senator Bernie Moreno explicitly warned that if the bill does not reach a full Senate vote before May, the midterm election cycle will make significant legislation politically untouchable. The Senate will enter a five-week recess in early August, after which midterm campaign activities will intensify. If Democrats retake the House in the November elections, legislative work could stall, pushing the bill into 2027 or even 2030. Data from Polymarket shows the probability of passage has dropped from 82% in February to 47%.

Industry Impact Scenarios if the Bill Passes or Fails

If the CLARITY Act ultimately passes, it will bring three substantive changes to the U.S. digital asset industry. First, the jurisdictional division between SEC and CFTC will be elevated from guidance documents to federal law, providing a permanent legal basis for asset managers like BlackRock and Fidelity to launch crypto products. Second, decentralized projects can qualify as commodities by meeting quantifiable criteria such as “20% voting rights,” thus avoiding the stringent disclosure obligations of securities regulation. Third, non-custodial software developers will be exempt from the “money transmitter” definition, safeguarding the legality of open-source development within the U.S.

If the bill fails, regulatory uncertainty will persist for at least two years. The current enforcement-driven approach will continue, with more talent and capital flowing to jurisdictions with clearer regulatory frameworks like Singapore and Abu Dhabi. The crypto-friendly policies promoted by the Trump administration could be overturned after the midterm elections, and the industry will face a new wave of regulatory uncertainty.

Summary

The CLARITY Act is at the final legislative window in 2026. The joint pressure from Trump and Bessent injects political momentum into the bill, but stablecoin yield terms remain the core obstacle in the Senate’s progress. Banking lobbying, industry divisions, and moral controversies form a complex game matrix. The markup in mid-May will be a critical node: passing will establish the official U.S. crypto regulatory framework, missing it could delay legislation by years. For industry participants, the coming weeks are crucial in determining the future regulatory landscape.

Frequently Asked Questions

Q: What are the differences between the CLARITY and GENIUS bills?

The GENIUS Act was signed into law in July 2025, establishing a federal regulatory framework specifically for the issuance and reserve management of U.S. dollar stablecoins. The CLARITY Act covers a broader market structure of digital assets, including asset classification, SEC and CFTC jurisdiction, exchange registration standards, and legal responsibilities of DeFi participants, and is viewed as the “full version” of the GENIUS Act.

Q: What are the specific restrictions on stablecoin yield terms?

The Senate revised draft’s core restriction is prohibiting “passive yield”—interest or rewards earned solely by holding stablecoin balances. However, activity-based rewards, including payment incentives, trading rewards, and platform usage incentives, are still permitted. SEC, CFTC, and the Treasury will jointly develop rules to define the boundaries of legitimate activity incentives.

Q: How is jurisdiction between SEC and CFTC divided?

Sufficiently decentralized digital assets are classified as “digital commodities,” under exclusive CFTC jurisdiction. Early-stage assets with clear financing attributes are regulated by the SEC. The bill also sets a quantifiable criterion: if the issuer and related parties hold no more than 20% of voting rights collectively, the asset can be recognized as a commodity.

Q: What is the current legislative progress of the CLARITY bill?

The bill was passed in the House of Representatives in July 2025 with a vote of 294 to 134 and is currently stalled in the Senate Banking Committee. The Senate markup has been postponed from April to May, and it must go through committee review, a 60-vote Senate vote, reconciliation of House and Senate versions, and presidential signing.

Q: What are the implications if the bill does not pass?

If not passed before the 2026 midterm elections, crypto legislation may be delayed until the next Congress. The current enforcement-driven approach will continue, with more talent and capital flowing to jurisdictions with clearer regulations. The U.S. may further lose its competitive edge in the global crypto industry.