Banks Attempt to Undermine the CLARITY Act

In a last-minute effort, the US banking lobby is pushing to delay the CLARITY Act just days ahead of its scheduled markup by the Senate Banking Committee on May 14.

This week, the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America released a joint statement, rejecting the compromise stablecoin yield proposal put forth by Senators Thom Tillis and Angela Alsobrooks. The coalition argued that the language does not meet their policy objectives and creates serious loopholes that could lead to deposit flight from traditional banks.

The banking coalitions assert that Section 404 of the CLARITY Act still allows crypto platforms to provide rewards linked to account balances and the duration for which users hold assets, which they contend effectively constitutes deposit interest under a different guise. “Research shows that yield-earning stablecoins could diminish consumer, small-business, and farm loans by more than one-fifth,” the coalition indicated in their joint statement, emphasizing the need for Congress to get this right.

Lummis and Tillis respond

In response, the bill’s sponsors acted promptly. Senator Cynthia Lummis, chair of the Senate Banking Subcommittee on Digital Assets, shared on X that the finalized bipartisan text “reflects months of diligent work to achieve a yield compromise that is acceptable to all.” Senator Tillis, co-author of the deal, was more pointed in his remarks, cautioning that certain sectors of traditional finance might oppose any iteration of the CLARITY Act and are leveraging the stablecoin yield discussion as a means to indefinitely postpone the legislation.

Tillis’s concluding remarks in his public defense were clear: “Some in the banking industry may oppose both of these outcomes, and we respectfully choose to disagree.” The unified public defense from Lummis and Tillis indicates that the bipartisan coalition supporting the compromise remains solid as the markup deadline approaches.

The CLARITY Act passed the House with a vote of 294 to 134 in July 2025 and secured approval from the Senate Agriculture Committee in January 2026, but has repeatedly faced delays in the Senate Banking Committee due to the ongoing stablecoin yield disagreement. As reported by crypto.news, Senators such as Cynthia Lummis and Bernie Moreno have suggested that failing to make progress before the May 21 Memorial Day recess could push the next viable opportunity for the bill’s advancement to 2030.

Upcoming developments

Senate Banking Committee Chairman Tim Scott confirmed the markup hearing for May 14 at 10:30 am. The White House has indicated a target for passage by July 4, with crypto adviser Patrick Witt noting that the stablecoin yield deal is effectively finalized. Ripple CEO Brad Garlinghouse remarked at Consensus Miami 2026 that the previous week marked a “significant positive shift” in Senate momentum.

Galaxy Digital’s head of research, Alex Thorn, has estimated the chances of the bill passing at around 50-50, while prediction markets currently peg that figure above 60%. A HarrisX poll released this week revealed that 52% of registered US voters support the CLARITY Act, with 47% indicating they would consider supporting a candidate outside their party, provided that candidate backed the legislation while their preferred candidate did not.

For the bill to reach the president’s desk, it must successfully navigate the Senate Banking Committee markup, meet the 60-vote threshold, be reconciled with the Senate Agriculture Committee’s version, and then agree with the House-passed text. Each of these steps presents its own potential challenges.