The timeline for comprehensive crypto regulation in the United States has hit another speed bump. Senator Thom Tillis (R-NC) has reportedly urged Senate Banking Chair Tim Scott to postpone the markup of the CLARITY Act—a pivotal crypto market structure bill—until at least May. While the industry is eager for a legislative win, Tillis argues that rushing the process could ignore critical concerns from both the banking and digital asset sectors.
The primary friction point lies in stablecoin yield provisions. Currently, traditional banks and crypto advocates are locked in a debate over how rewards on stablecoins should be handled. Tillis, who has been mediating discussions between these two powerful groups, emphasized the need for a “rational basis” for the final language of the bill, stating that it is vital to hear all stakeholders before moving to a formal vote.
The Battle Over Stablecoin Yields and Bank Deposits
The central conflict preventing the CLARITY Act from moving forward involves the traditional banking system’s fear of “deposit flight.” Banking representatives argue that if stablecoin issuers are permitted to offer high yields on passive balances, it could trigger significant outflows from traditional savings accounts. This is a particular concern for community banks, which may lack the balance-sheet flexibility to replace those lost deposits without turning to expensive wholesale funding.
Recent negotiations suggested a potential middle ground: allowing rewards for stablecoins tied to active participation on third-party crypto platforms, but banning yields for simply holding a passive balance. However, big players like Coinbase CEO Brian Armstrong continue to push for more favorable terms that would benefit the broader crypto ecosystem. As long as these two industries remain at odds, Senator Tillis believes the markup is not yet ready for the Senate floor.
Political Pressure Mounts Ahead of November Midterms
The delay has sparked a sense of urgency among crypto advocacy groups. The Digital Chamber recently issued a letter to the Senate Banking Committee, pointing out that it has been over 270 days since the House passed the bill with bipartisan support. Their message is clear: “Clarity cannot wait.” Advocacy leaders argue that the 70 million Americans currently holding digital assets deserve a regulated environment, even if the bill’s terms aren’t “perfect.”
There is also a looming political shadow over the legislation. US Treasury Secretary Scott Bessent warned that the momentum for the CLARITY Act could evaporate if the bill isn’t passed before the November midterms. There is a prevailing fear within the industry that a change in House leadership could cause the deal to fall apart entirely, leaving the US crypto market in a state of regulatory limbo for the foreseeable future. For now, the industry’s eyes are on May, hoping that the extra month provides enough time for a compromise.
