TLDR
- Senator Angela Alsobrooks addressed banking executives at a Washington conference, emphasizing the need for mutual concessions on the CLARITY Act legislation.
- Traditional financial institutions oppose provisions allowing stablecoin rewards, concerned about potential deposit migration to crypto platforms.
- The proposed middle ground crafted by Senators Alsobrooks and Thom Tillis would permit restricted stablecoin rewards tied to transaction activity rather than dormant holdings.
- Senator Tillis remains undecided on the latest version and plans additional consultations with Coinbase representatives and banking associations.
- Prediction markets show 69% probability of presidential approval this year, with industry forecasters anticipating passage by summer.
Lawmakers in the U.S. Senate are attempting to advance the Digital Asset Market Clarity Act, though tensions between traditional banking institutions and cryptocurrency advocates continue to create obstacles. At Tuesday’s American Bankers Association conference in Washington, Senator Angela Alsobrooks, who serves on the Senate Banking Committee as a Democrat, emphasized that all stakeholders must accept some level of compromise.
“I think I have to level set that all of us will probably walk away just a little bit unhappy,” Alsobrooks said.
The central point of contention revolves around reward programs for stablecoin holders. Traditional banks worry that permitting crypto platforms to offer yield on stablecoin deposits would trigger a mass exodus of funds from conventional savings products toward digital asset platforms. Lobbying efforts by the American Bankers Association have focused intensely on eliminating what they characterize as regulatory gaps in the proposed legislation.
Meanwhile, cryptocurrency stakeholders have already conceded ground by agreeing not to provide returns on idle stablecoin balances. The remaining debate centers on whether yield programs connected to actual transaction activity—such as purchases or trading—should remain permissible.
JPMorgan Chase CEO Jamie Dimon has indicated recently that traditional banks might support transaction-linked rewards, which corresponds with proposals that crypto representatives have presented during White House discussions.
The Compromise Taking Shape
Senator Alsobrooks has partnered with Republican colleague Thom Tillis to develop compromise language acceptable to both industries. Their objective is establishing a framework that permits certain stablecoin reward mechanisms while safeguarding traditional banks against significant deposit withdrawals.
Senator Mike Rounds, also serving on the Banking Committee, acknowledged Tuesday that he remains uncertain about the optimal approach to stablecoin rewards but indicated support for tying them to transaction volumes rather than account balances.
The Banking Committee had originally scheduled a markup session for the legislation, which was subsequently postponed. Committee members are targeting late March for the markup, though timing depends substantially on whether Tillis endorses the current proposal.
Tillis has withheld his commitment thus far. Despite attending multiple sessions with industry representatives and White House advisors last week, he insists on conducting at least one additional meeting involving Coinbase delegates and banking trade associations before reaching a determination.
Where the Bill Stands Now
Should the legislation successfully navigate the Banking Committee markup process, it would be reconciled with companion legislation that has already cleared the Senate Agriculture Committee. Subsequently, the full Senate would need to conduct a floor vote, which would necessitate substantial Democratic support.
That prospect presents significant challenges. Democratic senators have expressed reservations regarding decentralized finance protocols, vacant leadership positions at the CFTC and SEC, and ethics frameworks governing senior officials’ personal cryptocurrency investments—concerns widely understood as referencing President Trump.
Timing constraints add another layer of complexity. Senate floor scheduling is highly competitive, and competing priorities including foreign policy matters and Trump’s push for voter identification legislation could delay consideration of cryptocurrency regulation.
The U.S. Office of the Comptroller of the Currency recently released a proposed rule consistent with last year’s GENIUS Act stablecoin framework. Cryptocurrency industry representatives maintain that this proposal preserves flexibility for their intended rewards structures.
Polymarket currently prices the probability of Trump signing the bill at 69%. Kristin Smith, President of the Solana Policy Institute, has forecast CLARITY Act passage by July.
Industry organizations acknowledge that negotiations are progressing constructively but have not reached resolution. They are simultaneously developing contingency strategies should the markup extend beyond March.
