The CLARITY Act reaches a critical step; can it overcome the obstacles?

Article: Blockchain Knights

Although some key U.S. lawmakers are pushing to send the bill to the president for signature before July 4th, the banking industry is still lobbying hard to kill the CLARITY Act.

Currently stalled in the Senate for months, the core dispute remains over provisions related to stablecoins and the revenue rights of digital asset companies.

Recent bipartisan compromises have been openly opposed by the banking sector. Banks believe the draft threatens local lending foundations and could trigger a large-scale deposit run.

But supporters of the bill remain confident, buoyed by expectations of Trump’s support, as Senate negotiators withstand pressure to pave the way for a key committee review during the week of May 11.

The controversy centers on how the CLARITY Act will regulate “income-generating payment stablecoins.” Including five major industry groups such as the American Bankers Association and the Banking Policy Research Institute jointly criticizing the loopholes in Section 404 drafted by senators.

The banking industry admits that the policy goal of the draft is to prohibit direct payment of yields and interest, but points out that the current text still allows exchanges and intermediaries to distribute benefits under names like “member rewards,” as long as the calculation methods differ from traditional interest.

The banking alliance believes that allowing rewards based on holding duration, account balance, and other standards essentially encourages users to idle their stablecoins, while banks rely on these idle deposits to support community lending.

Internal research warns that if income-generating stablecoin alternatives flood the market, funds used for consumer, small business, and agricultural loans could decrease by 20%.

It is noteworthy that the division within the financial industry is intensifying. Large retail banks and community lenders remain strongly opposed, but institutions lacking large consumer deposit sectors show cautious acceptance of the current framework.

Facing the deadlock, lawmakers have launched countermeasures. Senators insist that the draft has undergone tug-of-war, aiming to eliminate deposit run threats without stifling innovation. The text explicitly bans stablecoin rewards that function like bank interest, with the banking industry fully involved in negotiations.

The Senate’s legislative push is now in countdown mode. The chairman of the Senate Banking Committee confirmed efforts to advance bipartisan cooperation in May to promote market structure legislation.

In the coming weeks, they will push for committee review, aiming to submit the final bill to the president before the end of June.

Supporters warn that if it cannot pass before the August recess, it could cause permanent capital flight, effectively ceding U.S. dominance in digital assets.

Despite the powerful lobbying by the banking industry, market sentiment remains generally optimistic. Leaders from Ripple and Coinbase have recently publicly expressed hopes for a structural shift in legislation.

Market forecasts show that there is over a 60% chance the CLARITY Act will become law by 2026. As the May 11 review approaches, whether bipartisan cooperation can ultimately overcome entrenched fiscal resistance remains to be seen.