Senate CLARITY Act Vote Faces Banking Industry Pressure

Stablecoin reward dispute threatens momentum for U.S. crypto market structure legislation

TL;DR

• The Senate Banking Committee is scheduled to mark up the CLARITY Act on May 14.
• Banks and crypto firms are fighting over stablecoin reward provisions tied to deposit competition.
• White House officials, senators and crypto executives remain divided over the bill’s final language.

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The Senate Banking Committee is scheduled to mark up the CLARITY Act on May 14, setting up the first formal Senate committee vote on a comprehensive U.S. crypto market structure bill while banks intensify opposition to stablecoin reward provisions they say could threaten traditional deposits.

The bill, formally H.R.3633, the Digital Asset Market Clarity Act of 2025, passed the House in July 2025 with a bipartisan 294-134 vote. Senate negotiations later slowed after disagreements emerged over stablecoin yield rules, decentralized finance oversight, SEC and CFTC jurisdiction, ethics provisions and consumer protections.

The committee markup is scheduled for Thursday at 10:30 a.m. ET. Another timing reference placed the vote at 8:00 PM IST. The White House is pushing to finalize crypto legislation before July 4, 2026.

The current dispute centers on whether stablecoin users should be allowed to receive rewards or yield-like incentives. Banks argue those products could compete directly with deposits, while crypto advocates say the issue is about consumer choice and financial competition.

Recent compromise language attempts to separate passive interest-style yield from activity-based rewards. Under the proposal, stablecoin issuers would face restrictions on simple holding yield, while platforms could still offer rewards tied to payments, engagement, transactions or ecosystem participation.

Senators Thom Tillis and Angela Alsobrooks helped negotiate the compromise. Coinbase CEO Brian Armstrong reportedly approved the revised framework after criticizing earlier Senate draft language.

Patrick Witt, executive director of the White House Presidential Advisory Committee on Digital Assets, said on May 11 that bank trade leaders declined invitations to earlier White House meetings focused on resolving the stablecoin rewards issue.

Witt wrote, “I specifically requested the attendance of Mr. Nichols and other bank trade CEOs at the meetings we hosted back in February to resolve the stablecoin rewards/yield issue. They refused. I guess the White House was beneath them?”

Rob Nichols, president of the American Bankers Association, urged bank executives and employees to contact senators before the markup. Banking groups argue that stablecoin issuers, exchanges and brokers could attract customer funds using return-bearing products that resemble deposit accounts.

Banks say deposits support lending to households, farms, corporations and small businesses, and they warn that migration into reward-bearing stablecoins could raise funding costs and pressure lending capacity.

The American Bankers Association also warned lawmakers about what it described as a “stablecoin loophole,” arguing affiliated crypto platforms could still deliver economic benefits through rewards or rebates even if direct yield payments from issuers are restricted.

The White House and crypto industry groups challenged those claims using separate economic estimates and market projections.

The Council of Economic Advisers estimated that banning stablecoin yield would increase bank lending by about $2.1 billion, equal to roughly 0.02% of total lending under its base-case assumptions. The council also argued that stablecoin reserves held in cash, bank deposits or Treasury instruments would continue circulating through financial markets rather than permanently leaving the banking system.

Galaxy Research estimated that 60% to 70% of stablecoin growth under the GENIUS Act framework could come from offshore demand for dollar-denominated assets. Galaxy also projected imported deposits could exceed domestic deposit migration by roughly 2:1.

Galaxy estimated that every newly minted stablecoin dollar could generate approximately 32 cents of net U.S. credit. The firm projected credit expansion of about $400 billion through 2030 in its base-case scenario and as much as $1.2 trillion in a stronger growth scenario.

Galaxy also projected stablecoin reserve demand could compress Treasury bill yields by 3 to 5 basis points. At the same time, the research firm acknowledged that some low-cost deposits would likely migrate away from banks and that funding costs and net interest margins could face pressure.

Senator Bernie Moreno, an Ohio Republican and member of the Senate Committee on Banking, Housing, and Urban Affairs, sharply criticized banking opposition to the legislation on May 11.

Moreno wrote, “The banking cartel is in full panic mode,” while accusing banks of attempting to preserve control over consumer deposits.

He added, “For decades, these banks have treated your deposits like their personal piggy bank, paying you next to nothing while lending YOUR money out for massive profits and executive bonuses.”

Moreno also tied the banking dispute to allegations of politically motivated debanking during the Biden administration.

He wrote, “During the Biden era, these same banks worked hand-in-glove with Sen. Warren and her allies to debank Americans, including President Trump’s own family. They shut down accounts of conservatives, patriots, and anyone who dared challenge the regime, all while regulators applied pressure under schemes like Operation Choke Point 2.0. It wasn’t about risk. It was about political control. Now that innovative stablecoins threaten to break their monopoly and give you actual financial freedom? They’re running to Congress again, screaming about ‘threats to economic growth and financial stability.’”

Moreno added, “Hands off the people’s money. Let Americans choose real competition and better returns … I’m voting to break the cartel.”

Stand With Crypto, backed by Coinbase, urged supporters to contact senators ahead of the markup, arguing banking lobbyists were trying to weaken the stablecoin rewards framework. Cody Carbone, CEO of The Digital Chamber, said banks had months to negotiate the issue and were now attempting to reopen the debate at the final stage.