Bernstein: The current period is a critical window for the passage of the "Clarity Act." Failure to reach a quick consensus will increase the risk of the bill being delayed or failing.

On January 12, Bernstein, a Wall Street institution, stated in its latest analysis report that as legislators face increasingly deepening disagreements between the banking industry and the crypto sector over stablecoin yield issues, the window for the US to pass the Crypto Market Structure Act is rapidly narrowing. Analyst Gautam Chhugani noted in a client report on Monday that although the core content of the Clarity Act (including the distinction between digital commodities and securities and the regulatory approach to decentralized finance) is controversial, these issues are unlikely to hinder its progress. The analyst believes that the main obstacle is that banking representatives are trying to restrict crypto platforms from offering stablecoin balance yields. Although the GENUIS Act, signed into law last year by President Trump and primarily targeting stablecoins, prohibits stablecoin issuers from directly paying yields, it still allows crypto platforms and their affiliates to distribute yields to users (typically annualized 2% to 4%). The analyst stated that the banking industry views these incentives as a threat to traditional deposits because the stablecoin market could grow from the current over $275 billion to trillions of dollars and become a “systemically important” sector. The crypto industry argues that re-discussing this issue would undermine the hard-won legislative compromise of the GENUIS Act and is anti-competitive and anti-free market in nature. The analyst said both sides see this as an insurmountable red line, and failure to reach a quick compromise could increase the risk of the bill being delayed or failing. Bernstein added that political timing is crucial, and the bill must make progress by the second quarter of 2026 at the latest to avoid interference from midterm election dynamics. The company stated that the pro-crypto stance of the Trump administration gives the industry an advantage but warned that if yield disputes persist, the momentum could still stall. Chhugani emphasized that this is a “critical window.”