Stablecoins have finally become the focal point of the political battle in Washington, blocking the entire legislative process regarding cryptocurrencies. The reason? Banks and crypto companies cannot agree on a simple issue: whether it is possible to earn income on stablecoin balances.

Looking at how this is unfolding, it truly reveals the depth of disagreements. On one side, the banking sector is urging Congress to close so-called regulatory gaps before stablecoins become a serious threat to deposits. Standard Chartered estimated in January that by the end of 2028, stablecoins could withdraw about $500 billion from the U.S. banking system. Small and medium-sized banks will suffer the most — that is the argument that associations insist on.

On the other side, the crypto industry claims that banks are simply protecting their business model. Incentives related to payments or network usage are needed for the digital dollar to compete with traditional payment channels. Without them, stablecoins will remain just settlement tools.

The Senate’s CLARITY Act was supposed to resolve this, but it got stuck precisely on this issue. A congressional study from March revealed uncertainty: the bill prohibits issuers from paying income directly, but does not clarify the so-called tripartite model, where intermediaries — exchanges and other platforms — stand between the issuer and the user. This leaves room for disputes.

Much of today’s stablecoin regulation news discussion revolves around the fact that the market size makes this issue impossible to ignore. Boston Consulting Group estimated that last year, stablecoin transaction volume was about $62 trillion. Of course, after excluding bot trading and internal exchange operations, the real economic activity was around $4.2 trillion — but that’s still a huge figure.

Time is critical. According to Alex Thorne of Galaxy Digital, if the bill is not reviewed by the committee by the end of April, the likelihood of its passage in 2026 will drop to critically low levels. In early January, Polymarket’s forecast market estimated an 80% chance of passage, but after setbacks, it fell to 50%. Kalshi shows that the probability of passing by May is only 7%.

A person from the White House tried to find a compromise: allow limited income in certain scenarios, such as p2p payments, but prohibit earning income on immobile balances. Crypto companies accepted this, banks rejected it. Now negotiations are stalled.

If Congress does nothing, regulators are ready to step in. The U.S. Office of the Comptroller of the Currency proposes considering providing funds to affiliated parties as a violation, which are then used to pay income to users. This means the executive branch can independently set rules through regulatory standards.

Indeed, this is no longer just about profitability. It’s about how stablecoins will function within the financial system and who will benefit from their development. If the bill fails, the crypto industry will enter a period where it must prove its value through actual implementation rather than regulatory expectations. Conversely, passing the law would mean investors can pre-assess the growth of stablecoins and asset tokenization.

The next few weeks are decisive. Washington needs to determine how far stablecoin regulation can go and whether legislation can establish clear boundaries before the political schedule becomes too tense. If senators do not act this spring, regulators are clearly prepared to take the initiative.