There is a breaking point that few mention when talking about why the Clarity Act remains stalled in Washington. The real battleground in crypto is not the general regulatory frameworks, but something much more specific: stablecoin rewards. And that is the conflict where the sector is truly losing momentum.

On one side, crypto companies defend tooth and nail their right to offer incentives to users who interact with stablecoins. On the other, banking lobbyists arrived with an argument that resonated: if stablecoins generate yields like savings accounts, then the deposit business dies, and with it, traditional bank lending. It’s an argument that sounds exaggerated until you see legislators from both parties buy into it.

The result is a complete deadlock. The heels have clung so tightly that the bill could be pushed into 2027 if there’s no movement in the coming weeks. And here’s where it gets interesting: the crypto side thought it had the advantage. The GENIUS Act has already passed and seemed to allow these reward programs. But then the Office of the Comptroller of the Currency proposed a restrictive interpretation that shook that confidence.

The White House entered the conversation favoring a compromise that would allow some incentives, but only if they are truly used in transactions, not just to hold stablecoins. Trump’s advisors seemed to have a more pragmatic view. But here’s the problem: bankers don’t necessarily see the White House as the one with the power to advance a Senate bill. And so far, they haven’t moved an inch from their position that almost all rewards should be banned.

So, where does that leave us? Banks can continue resisting. If they keep framing this as an existential threat, they could maintain their allied legislators. The risk for them is that the GENIUS Act remains the current law, but they probably trust that a final restrictive OCC rule will protect them.

But here’s the dilemma for the crypto sector: if they give in on stablecoin rewards to unlock the Clarity Act, that still doesn’t guarantee the bill will pass the full Senate. Democrats are asking for other things: stronger defenses against illicit finance in DeFi, limits on the business ties of officials with crypto, and filling vacant seats at the CFTC and SEC. None of these are impossible obstacles, but nothing has been resolved.

And then there’s the reality of the calendar: it’s a midterm election year. Lawmakers will hardly work after July. Polymarket bettors see a 70% chance of it passing this year, but that number is probably inflated by optimism. Crypto insiders are frustrated with the unwavering stance of bankers, even as some crypto company leaders have shown willingness to make concessions on certain types of rewards.

CEOs like those of Coinbase and Ripple have tried to maintain confidence, predicting an agreement. But in reality, we are at a point where both sides might have to decide what hurts more: ceding on rewards, or watching the legislation that was supposed to bring regulatory clarity to the sector fail. For now, no one is moving. Tensions are rising. And that crypto ground remains the point no one wants to abandon.