As the United States Senate prepares for a critical, long-awaited markup of the bipartisan CLARITY Act — crypto market structure legislation that has been stalled since late last year — the final debate has shifted into “a proxy war between banks and everyone else,” one expert noted to the Washington Reporter.
The stakes are not small. The CLARITY Act is intended to establish clear rules of the road for digital assets, protect consumers, clarify regulatory authority, and help ensure the future of crypto innovation is built in the United States instead of being pushed offshore.
But instead of focusing on consumer protection, market structure, or making America the crypto capital of the world, the banking lobby is zeroing in on one issue: stablecoin yield. This is the latest drama in the CLARITY Act’s ongoing saga, which the Reporter has extensively covered for months.
Banks are demanding restrictions to prevent stablecoins from offering rewards that resemble interest on bank deposits; their critics argue that, they do not want consumers to have a new option that might compete with the traditional banking system.
Sens. Thom Tillis (R., N.C.) and Angela Alsobrooks (D., Md.) attempted to lead negotiations toward a compromise, and last week announced a plan that experts argued gave the banks almost everything they wanted, but it was ultimately unsatisfactory to the banking side of the debate.
Banks released a statement saying the compromise “fell short” and noted they would be giving lawmakers “suggested edits” to the bill text. Eleanor Terrett of Crypto America quoted one Senate staffer who summed up the mood bluntly: “time to move on from yield. Banks should not turn a modest win into a loss.”
Tillis and Alsobrooks also pushed back, noting the numerous ways they had worked with the banking industry and attempted to incorporate its feedback. Their response was diplomatic, but clear: “we respectfully agree to disagree.”
Patrick Witt, the Executive Director of the White House Council of Advisors for Digital Assets, was less delicate.
“It’s not a true compromise because it doesn’t eliminate yield completely,” Witt wrote sarcastically. “Banks sure have a funny way of defining ‘compromise.’”
On Sunday, Rob Nichols of the American Bankers Association (ABA) sent an extensive letter to “every bank CEO in the country,” calling for them to oppose the policies that had been agreed to in the Senate.
Witt responded by pointing out that the banking lobby had a chance to engage earlier and declined.
“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?” Witt said.
By Tuesday, the fight had escalated again. Sander Lutz of Decrypt Media reported that banking policy leaders were signaling that if they lose on stablecoin yield at Thursday’s CLARITY Act markup, they will ramp up their fight for changes on the Senate floor.
The same trade leader reportedly took a swipe at the crypto industry’s public pressure campaign.
“We don’t debate this on X,” the banking source said. “We’re very professional. X is really not the proper place to negotiate this.”
The comment drew quick criticism from digital asset advocates and policy observers, who argued that the banking industry has been privately lobbying lawmakers, while objecting to crypto supporters making their case publicly.
The broader political environment only raises the stakes. More than 100 amendments have reportedly been filed ahead of the Senate Banking Committee markup, including dozens from Sen. Elizabeth Warren (D., Mass.), as opponents look to reshape, slow, or complicate the bill.
Industry sources say the fight over stablecoin yield has become a test of whether the Senate will move forward with a broader market structure framework or allow a narrower banking dispute to derail the legislation.
Supporters of the CLARITY Act argue the bill is designed to create clear rules for digital assets, protect consumers, and keep crypto innovation in the United States. They warn that overly restrictive stablecoin provisions could limit competition, preserve the banking industry’s market position, and weaken one of the most promising use cases for digital assets.
Banking groups, meanwhile, argued that stablecoin rewards could blur the line between digital assets and traditional deposits, raising concerns about consumer protection, financial stability, and the flow of deposits out of community banks.
That disagreement turned the final stretch before markup into one of the most closely watched fights in the digital asset debate. Crypto advocates and some Senate sources say that banks have already won significant concessions in the compromise language, but are continuing to press for more. Banking representatives have signaled they will keep fighting for changes on the Senate floor if the current language survives committee.
The Senate now faces a choice: advance the CLARITY Act as part of President Donald Trump’s broader push to make America the crypto capital of the world, or reopen one of the bill’s most contentious disputes and risk delaying the market structure framework supporters have been seeking for years.
