TLDR
- At a Washington banking summit, Senator Angela Alsobrooks urged financial institutions and crypto firms to find common ground on the CLARITY Act.
- Traditional financial institutions oppose provisions allowing stablecoin rewards, concerned about deposit migration from conventional banking products.
- A potential framework developed by Alsobrooks and Senator Thom Tillis would permit restricted stablecoin rewards tied to transaction activity rather than account balances.
- Tillis remains uncommitted to the current language and plans additional consultations with Coinbase representatives and banking associations.
- Prediction markets on Polymarket show 69% probability of presidential approval this year, with industry experts forecasting passage by summer.
Lawmakers in the U.S. Senate are working to advance the Digital Asset Market Clarity Act, though tensions between traditional banking interests and cryptocurrency advocates continue to create obstacles. During Tuesday’s American Bankers Association summit in Washington, Senator Angela Alsobrooks, a Democratic member of the Senate Banking Committee, delivered a frank assessment to attendees about the need for mutual concessions.
“I think I have to level set that all of us will probably walk away just a little bit unhappy,” Alsobrooks said.
At the heart of the dispute lies the question of stablecoin rewards programs. Traditional banking institutions worry that permitting cryptocurrency platforms to offer yields on stablecoin deposits would trigger customer migration away from conventional deposit accounts toward digital asset platforms. The American Bankers Association has mounted an aggressive advocacy campaign to eliminate what it characterizes as a regulatory gap in the proposed legislation.
Cryptocurrency industry representatives have already conceded ground by agreeing to prohibit rewards on dormant stablecoin balances. The remaining question centers on whether incentives connected to active use cases — such as purchases or trading activity — should remain permissible.
JPMorgan Chase CEO Jamie Dimon recently indicated openness within the banking sector toward transaction-linked rewards, a position that aligns with proposals the cryptocurrency sector has presented during White House discussions.
The Compromise Taking Shape
Alsobrooks has partnered with Republican Senator Thom Tillis to craft compromise language acceptable to both constituencies. Their objective is establishing a framework that permits certain stablecoin reward mechanisms while safeguarding traditional banks against significant deposit erosion.
Senator Mike Rounds, also serving on the Banking Committee, acknowledged Tuesday that he’s still evaluating the appropriate approach to stablecoin rewards but floated the concept of tying incentives to transaction frequency rather than deposit volume.
The Senate Banking Committee previously set a markup session for the legislation but postponed it. A rescheduled markup may occur before March concludes, contingent primarily on whether Tillis endorses the evolving draft.
Tillis hasn’t committed his support yet. Despite meeting repeatedly with industry stakeholders and White House personnel last week, he insists on conducting at least one additional session with Coinbase delegates and banking trade association representatives before finalizing his position.
Where the Bill Stands Now
Should the legislation successfully navigate the Banking Committee markup process, it will be reconciled with companion language that previously cleared the Senate Agriculture Committee. Subsequently, the combined bill would face a full Senate vote, necessitating substantial Democratic crossover support.
That prospect presents considerable challenges. Democratic members have voiced apprehensions regarding decentralized finance protocols, vacant leadership positions at the CFTC and SEC, and ethics frameworks governing senior administration officials who maintain personal cryptocurrency investments — an apparent allusion to President Trump.
Additionally, calendar constraints loom large. Senate floor time remains scarce, and competing priorities including foreign policy matters and Trump’s push for voter identification legislation could relegate cryptocurrency policy further down the legislative queue.
The U.S. Office of the Comptroller of the Currency recently unveiled a regulatory proposal harmonized with last year’s GENIUS Act stablecoin framework. Cryptocurrency industry representatives assert the proposal maintains flexibility for their envisioned rewards initiatives.
Polymarket currently assigns 69% probability to Trump signing the legislation. Solana Policy Institute President Kristin Smith has projected the CLARITY Act will secure passage by July.
Industry coalitions describe ongoing negotiations as progressing favorably but acknowledge gaps remain. They’re simultaneously developing contingency strategies should the markup extend beyond March.
