Clarity Act Markup Stalls Amid Bank Resistance to Stablecoin Yields

The markup of the Clarity Act has slipped into May, as various friction points remain unresolved. Key issues include provisions on decentralization, securing Republican votes, and addressing stablecoin yield. Notably, Donald Trump expressed his support for the legislation at a recent event, promising to sign it upon passage.

Zachary Townsend, CEO of crypto insurance company Meanwhile, remarked that traditional banks’ attempts to block yield-bearing stablecoins amount to a "sideshow." He argues that these efforts will not change the inevitable market dynamics: “They lobby, they delay, but they lose the market anyway.” Townsend anticipates that deposit migration to stablecoins is structural and will continue regardless of legislative outcomes.

At present, the Clarity Act is seen as essential for clarifying regulations surrounding stablecoins. Already, the Genius Act—signed into law by Trump in July 2025—requires stablecoin issuers to maintain one-to-one reserves and prohibits them from offering direct interest to holders. This has raised concerns among banking groups that allowing stablecoins to offer yields could siphon deposits from traditional banks, potentially reducing their lending capacity.

The stakes are high, with some analysts predicting banks could lose up to $1.5 trillion in deposits to stablecoins by 2028, irrespective of yield rules. A recent White House economic assessment indicates that eliminating stablecoin yields would only marginally increase traditional bank lending, suggesting that banks’ fears might be overstated.

As the legislative calendar tightens, pressure is mounting for a resolution. Republican Senator Thom Tillis has requested additional time to consult banks on the yield issue. If the markup does not occur by mid-May, the likelihood of the Clarity Act being enacted before the US midterm elections in November diminishes significantly.

Experts warn that failure to pass the Clarity Act could result in a complex and prolonged legislative process. One analyst from Galaxy Digital noted that if delays continue, the probability of enactment might drop sharply, estimating only a 50% chance of passage by 2026. The market is also reflecting this uncertainty; predictions for the Clarity Act's passage have decreased from 82% in February to 47% now.