TLDR
- April represents a critical deadline for the CLARITY Act in the Senate Banking Committee, with 2026 passage unlikely if missed
- Polymarket odds sit at 56% (down 9 points); Kalshi forecasts only 30% probability before June
- Central controversy revolves around permitting stablecoin issuers to distribute yield to holders
- Coinbase withdrew its endorsement in January, stating a flawed bill is worse than no legislation
- Gnosis co-founder raises concerns the legislation could consolidate crypto power among centralized players
Time is running short for the CLARITY Act, America’s proposed framework for digital asset regulation. Galaxy Research’s Alex Thorn issued a stark warning: unless the legislation reaches the Senate floor in early May, its prospects for 2026 passage essentially evaporate. The Senate Banking Committee faces an end-of-April deadline to advance the measure.
Senate Majority Leader John Thune has publicly acknowledged the April timeline appears unrealistic. With the Senate prioritizing the SAVE America Act, the CLARITY Act has been relegated to a lower position on the legislative calendar.
According to Thorn, each passing day narrows the available window for substantive floor discussion. Should April conclude without committee action, he characterized the likelihood of 2026 enactment as “extremely low.”
Betting markets are signaling similar pessimism. [[LINK_START_0]]Polymarket[[LINK_END_0]] data reveals the probability of enactment during the current year has declined 9 percentage points to 56%. Kalshi projects even dimmer prospects, assigning 30% odds before June and merely 7% before May.
The Stablecoin Yield Controversy Takes Center Stage
The primary flashpoint centers on whether stablecoin providers should be permitted to distribute interest earnings to token holders.
Representative French Hill has declared that eliminating stablecoin yield represents a non-negotiable requirement for Senate advancement. Traditional banking institutions contend that yield-generating stablecoins would divert deposits from the regulated banking sector.
The cryptocurrency sector counters that yield mechanisms enhance stablecoin utility for payment applications. [[LINK_START_1]]Coinbase[[LINK_END_1]] rescinded its support in January. Chief Executive Brian Armstrong argued the current draft undermines decentralized finance, prohibits stablecoin yield distribution, and constrains tokenized real-world asset development. “We’d rather have no bill than a bad bill,” Armstrong declared.
Senator Angela Alsobrooks has suggested mutual concessions may prove necessary. Paul Grewal, White House cryptocurrency adviser and Coinbase Chief Legal Officer, has accused banking interests of obstructing progress.
Unfinished Business on DeFi and Agency Jurisdiction
Thorn indicated the stablecoin yield question might not represent the final hurdle. Outstanding matters include decentralized finance supervision frameworks, developer liability protections, and the division of regulatory responsibilities between the Securities and Exchange Commission and Commodity Futures Trading Commission.
Attorney Jake Chervinsky noted that banking sector anxiety extends beyond yield payments to concerns about stablecoin capital migrating into DeFi ecosystems.
Dr. Friederike Ernst, Gnosis co-founder, expressed alarm that the bill’s framework threatens to channel crypto activity exclusively through licensed gatekeepers. This approach, she cautioned, could concentrate cryptocurrency infrastructure control among a limited group of major institutions.
Ernst acknowledged certain positive elements, including safeguards for peer-to-peer transactions and self-custody rights, plus clarification regarding SEC and CFTC jurisdictional boundaries.
Senator Bernie Moreno maintains optimism for April passage and presidential signature. Thorn characterized that schedule as increasingly improbable.
