CLARITY Bill Stablecoin Yield Negotiation Stalls, Banking Sector Pressures Senate to Halt

The U.S. “CLARITY Act” was passed by bipartisan support in the House of Representatives and then referred to the Senate Banking Committee. However, as of the end of February 2026, it remains stalled with no progress in hearings or voting schedules. Major disagreements center on whether stablecoins can pay yields to holders; the banking industry supports strict restrictions, while cryptocurrency companies strongly oppose.

Current Status of the Bill: Stalled in the Senate after House Passage

(Source: BeInCrypto)

The CLARITY Act was passed in the House in July 2025 with bipartisan consensus. Its main goal is to clarify when digital assets are regulated by the U.S. Securities and Exchange Commission (SEC), when they fall under the Commodity Futures Trading Commission (CFTC), and to establish unified registration rules for crypto exchanges, brokers, and custodians.

However, after being referred to the Senate Banking Committee, progress has nearly come to a halt—no hearings have been held, the draft text is far from finalized, and no committee votes are scheduled. Insider sources close to negotiations say the parties are “still far from reaching an agreement.” While the American Bankers Association and the Independent Community Bankers of America deny that negotiations have broken down and say discussions are ongoing, disagreements over the wording of the draft persist.

Key Dispute: Who Controls the Definition of Stablecoin Yields

In early 2026, the focus of CLARITY Act negotiations shifted from SEC and CFTC regulatory boundaries to the issue of stablecoin yields. The banking industry argues that stablecoins with yield mechanisms essentially function as unregulated bank deposits and should be strictly restricted. Crypto companies take the opposite stance; Coinbase CEO Brian Armstrong publicly stated that stablecoins can responsibly generate yields, and banning reward mechanisms would harm innovation and weaken competitiveness.

In recent weeks, the White House has organized multiple meetings with banks and crypto firms. Officials reportedly hope to reach an agreement on yield issues by March, but as of February 28, no substantial breakthroughs have been achieved on key language.

Four Major Unresolved Core Issues of the CLARITY Act

• Stability of Stablecoin Rewards: Whether stablecoin reward mechanisms constitute a legal “interest” prohibition remains unclear, hindering overall progress.
• Scope of Transaction Incentive Restrictions: How to set compliant limits and applicable scope for transaction rewards still needs clarification.
• SEC and CFTC Jurisdiction Boundaries: The final division of regulatory authority over specific digital asset categories remains undecided.
• Obligations of DeFi Developers: Clear boundaries of compliance responsibilities for decentralized finance (DeFi) protocol developers are a point of significant disagreement.

If these issues cannot be substantively advanced soon, the bill may become further entangled in the political swirl of the 2026 midterm elections, making its passage timeline even more uncertain.

Frequently Asked Questions

Q: What are the main goals of the CLARITY Act, and why is it important for the crypto industry?
A: The CLARITY Act aims to clarify the regulatory boundaries of digital assets under the SEC and CFTC and to establish unified registration standards for crypto exchanges, brokers, and custodians. It is the first significant legislation attempting to create a comprehensive regulatory framework for the U.S. crypto market. If passed, it would provide long-needed regulatory certainty for the industry.

Q: Why does the banking industry oppose allowing stablecoins to pay yields?
A: Banks worry that if yield-bearing stablecoins are not subject to the same regulations as bank deposits, it would create unfair competition and lead to a flow of funds from regulated savings accounts to crypto platforms. The Independent Community Bankers of America (ICBA) estimates that allowing platforms to pay stablecoin yields could reduce community bank deposits by over $1.3 trillion.

Q: What is the current timeline for the CLARITY Act’s passage, and what risks does the election year pose?
A: The bill is still stuck in the Senate Banking Committee, with no hearing or voting schedule set. If negotiators can narrow key disagreements by March, the committee might advance the bill that month. Otherwise, delays could push the bill into the political priorities of the election year, with passage potentially postponed until mid-2026 or later.