Major retail banks and trade groups are rejecting the latest CLARITY Act stablecoin yield compromise

Institutions like Goldman Sachs and Morgan Stanley appear to now be supporting the highly contested issue of stablecoin yield in the CLARITY Act legislation after months of major banks and trade groups aligning to reject those provisions. 

For companies like Goldman Sachs, the proposed CLARITY Act is a path into crypto markets despite the concern that stablecoin yield will negatively affect the traditional finance sector. 

Meanwhile, senators are insisting that provisions regarding ethics must be included, or the bill will not be passed. 

Are banks starting to disagree over allowing stablecoin yields?

As the Senate prepares to mark up the Digital Asset Market Clarity Act (CLARITY Act), major banking trade groups are doubling down on their resistance to stablecoin yields, while some of the largest financial institutions are quietly breaking ranks to support the legislation.

The split appears to be driven by business models. Lenders with large consumer-facing operations fear that dollar-pegged tokens will suck deposits out of the banking system. 

However, institutions without major retail exposure, such as Goldman Sachs (NYSE: GS), BNY (NYSE: BK), and Morgan Stanley (NYSE: MS), are signaling a willingness to accept the compromise language released last week by Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.), according to Eleanor Terrett, host of Crypto in America.

For Wall Street giants, the CLARITY Act provides clearer legal authority under the Bank Holding Company Act to engage in crypto activities like trading, staking, and lending. It also establishes groundwork for portfolio margining, which is an area these firms are eager to enter.

In contrast, a coalition including the Bank Policy Institute, American Bankers Association, and Independent Community Bankers of America issued a joint statement arguing the language “falls short” of clearly prohibiting yield on stablecoins. 

They fear that crypto firms like Coinbase (NASDAQ: COIN) and Stripe could structure “risky products” that achieve similar economic outcomes as interest-bearing accounts.

Senator Tillis hit back on the social media platform X, stating that while some in the banking industry “may not want either of these things to happen, we respectfully agree to disagree.”

When asked about the provision, at Consensus 2026, Senator Kirsten Gillibrand (D-N.Y.)  replied: “I think there is an agreement, and I think it might last because everyone’s unhappy… I think that’s done.” 

What is delaying the CLARITY Act?

While the stablecoin war may be settling, issues concerning consumer protections, illicit finance, and ethics still remain. Speaking at Consensus 2026, Senator Gillibrand was adamant that the CLARITY Act cannot move forward without a provision banning senior officials from profiting from insider status.

“There will be no one voting for this bill if we don’t have an ethics provision,” Gillibrand warned. She stated that members of Congress, vice presidents or presidents themselves along with senior administration officials, should not be allowed to get rich off their insider status. 

She gave negotiators a strict deadline, stating that these three issues must be resolved within the week to keep the bill on schedule for an August vote. If the ethics clause is not included, Gillibrand insists Democrats will pull their support.

As Cryptopolitan reported, Galaxy Digital’s Alex Thorn pointed out that the ongoing race for control of the Senate raises the stakes. Former Senator Sherrod Brown is running for the Ohio seat, and if Democrats take the Senate, either Brown or Elizabeth Warren could chair the Banking Committee, a scenario Thorn describes as “hostile territory” for the bill. 

“Candidly, if it doesn’t happen, then I think the likelihood is going to drop precipitously because if it gets into midterms — it’s going to be too much of a loaded issue,” Brad Garlinghouse, CEO of Ripple, warned while speaking at a conference this week.

Despite the hurdles, Cryptopolitan recently reported Polymarket data showing that the probability of the CLARITY Act becoming law in 2026 surged to approximately 68%, up from lower levels just days ago.

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