Key Takeaways
- North Carolina Senator Thom Tillis has requested that Senate Banking Committee Chair Tim Scott postpone the CLARITY Act markup until May
- The central issue revolves around provisions governing stablecoin yield and reward mechanisms
- Traditional banking institutions worry stablecoin yields could trigger significant deposit withdrawals from conventional banks
- The Digital Chamber, representing crypto interests, demands immediate progress on the legislation
- Senator Moreno has cautioned that failure to pass the bill by May could indefinitely derail digital asset legislation
The CLARITY Act, a crucial piece of crypto market structure legislation pending in the US Senate, is encountering additional delays. North Carolina Republican Senator Thom Tillis informed journalists on Monday that he anticipates the Senate Banking Committee will not conduct its markup session during April. Instead, Tillis has formally requested Committee Chair Tim Scott to reschedule the proceedings for May.
As a central figure in negotiations aimed at reconciling competing interests between traditional banking and cryptocurrency sectors, Tillis emphasized to reporters the necessity of allowing sufficient time for all stakeholders to present their perspectives before advancing the legislation.
The legislation achieved passage in the House of Representatives with bipartisan backing nearly twelve months ago. Since then, it has successfully navigated through the Senate Agriculture Committee, though it must still pass the Senate Banking Committee before reaching the full Senate floor for consideration.
Stablecoin Rewards Controversy at Center of Debate
The primary obstacle preventing progress stems from conflicting views on stablecoin reward mechanisms. Traditional banking representatives express concern that permitting stablecoin issuers or cryptocurrency platforms to provide yield to token holders would incentivize deposit migration away from conventional banking institutions, particularly affecting smaller community banks.
According to banking sector representatives, these smaller institutions may lack sufficient financial resources to withstand substantial deposit outflows.
Conversely, cryptocurrency firms such as Coinbase advocate for more accommodating provisions regarding stablecoin rewards. These companies contend that imposing restrictions on rewards would stifle technological advancement and innovation.
According to last week’s draft version, the proposed language would prohibit rewards on dormant stablecoin holdings while permitting yield connected to active uses such as transactions. An insider informed The Block that modifying the text at this stage would prove challenging.
Senators Tillis and Maryland Democrat Angela Alsobrooks have been collaborating to find common ground on this contentious matter.
Crypto Advocates Intensify Campaign for Action
On Monday, The Digital Chamber, an advocacy organization representing cryptocurrency interests, delivered correspondence to the Senate Banking Committee calling for expedited advancement of the legislation to markup “as soon as the calendar allows.”
The communication bore the signature of CEO Cody Carbone and was directed to both Tim Scott and Elizabeth Warren, who serve as the committee’s ranking Republican and Democrat respectively.
“More than 70 million Americans who have embraced digital assets deserve the regulatory clarity they have waited far too long for,” said Taylor Barr, the group’s government affairs director.
The Digital Chamber highlighted that more than 270 days have elapsed since the House approved the legislation.
US Treasury Secretary Scott Bessent has similarly exerted pressure on lawmakers. During March, he cautioned that Democratic control of the House following November’s midterm elections could jeopardize passage prospects.
Senator Bernie Moreno previously warned at the DC Blockchain Summit that if the bill did not pass by May, “digital asset legislation will not pass for the foreseeable future.”
This week, the Senate Banking Committee will initially focus on Tuesday’s confirmation proceedings for Kevin Warsh, President Trump’s selection for Federal Reserve Chair.
