Senate Banking Standoff: Will Stablecoin Rewards Derail the 2026 CLARITY Crypto Bill?

TLDR

• Senator Angela Alsobrooks informed banking executives at a D.C. conference that mutual concessions are necessary to advance the CLARITY Act crypto legislation.
• Banking institutions oppose provisions allowing stablecoin rewards, concerned about potential deposit migration from conventional banking accounts.
• The negotiated solution being developed by Alsobrooks and Senator Thom Tillis would permit restricted stablecoin rewards tied to transaction activity rather than idle holdings.
• Senator Tillis remains uncommitted to the present proposal and plans additional discussions with Coinbase representatives and banking associations.
• Prediction markets indicate a 69% probability of presidential approval this year, with industry forecasts suggesting July passage.

U.S. lawmakers are working to advance the Digital Asset Market Clarity Act through the Senate, though tensions between traditional financial institutions and cryptocurrency advocates continue to create obstacles. During an American Bankers Association conference in Washington this Tuesday, Senator Angela Alsobrooks—a Democratic member of the Senate Banking Committee—indicated that mutual sacrifices would be required from all parties.

The central point of contention involves rewards programs for stablecoin holders. Traditional banking institutions worry that permitting crypto platforms to offer incentives on stablecoin deposits could trigger significant customer migration away from conventional deposit accounts toward digital asset platforms. The American Bankers Association has mounted an aggressive campaign to eliminate what they characterize as a regulatory gap in the proposed legislation.

Cryptocurrency companies have already conceded ground by agreeing to prohibit rewards on dormant stablecoin balances. The remaining question centers on whether incentives connected to active use—such as purchases or exchanges—should remain permissible.

JPMorgan Chase’s CEO Jamie Dimon recently indicated that financial institutions might accept transaction-linked rewards, aligning with proposals the cryptocurrency sector has presented during White House consultations.

The Compromise Taking Shape

Alsobrooks has partnered with Republican Senator Thom Tillis to craft acceptable compromise language. Their objective is enabling certain stablecoin reward mechanisms while safeguarding traditional banks against substantial deposit withdrawals.

Senator Mike Rounds, also serving on the Banking Committee, stated Tuesday that he’s uncertain about the optimal approach to stablecoin rewards but suggested connecting them to transaction volume rather than account balances.

The Senate Banking Committee previously planned a markup session for the legislation but postponed it. A rescheduled markup may occur before March concludes, contingent primarily on whether Tillis endorses the current language.

Tillis has withheld commitment thus far. Despite multiple sessions with industry representatives and administration officials last week, he intends to conduct at least one additional meeting with Coinbase delegates and banking trade organizations before making his determination.

Where the Bill Stands Now

Should the legislation successfully navigate the Banking Committee markup process, it will be consolidated with corresponding measures already approved by the Senate Agriculture Committee. Subsequently, the complete Senate must conduct a floor vote, necessitating substantial Democratic support across party lines.

This presents a significant hurdle. Democratic senators have expressed reservations regarding decentralized finance protocols, vacant leadership positions at the CFTC and SEC, and ethical guidelines governing senior officials’ personal cryptocurrency investments—an apparent allusion to President Trump.

Calendar constraints also present challenges. Senate floor schedule availability is restricted, and competing priorities including foreign policy matters and Trump’s voter identification legislation demands could delay crypto-related bills.

The U.S. Office of the Comptroller of the Currency recently unveiled a regulatory proposal consistent with last year’s GENIUS Act stablecoin framework. Cryptocurrency industry representatives maintain the proposal accommodates their intended rewards program structures.

Polymarket currently assigns 69% probability to Trump signing the measure. Solana Policy Institute President Kristin Smith has forecasted CLARITY Act passage by July.

Industry organizations report negotiations are progressing favorably though consensus hasn’t been reached. They’re simultaneously developing contingency strategies should the markup extend beyond March.

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