By: Blockchain Knight

The U.S. cryptocurrency market regulatory bill "CLARITY Act," strongly promoted by Trump, has encountered a legislative deadlock due to disputes over stablecoin yields. The banking camp is vigorously pressing to prohibit interest rewards on deposits related to stablecoins, while the cryptocurrency industry insists on incentivizing compliance.

The period from late April to early May becomes the last realistic window for the bill to pass within the year; if it misses this window, the probability of passage will significantly decrease.

This controversy is the core unresolved issue of cryptocurrency regulation in Washington, fundamentally a dispute over the positioning of stablecoins — whether they are a tool focused on payment settlement or interest-bearing assets that can compete with bank accounts and money market funds.

The Congressional Research Service points out that while the "GENIUS Act" prohibits stablecoin issuers from paying interest directly, it does not clearly define "holders" in the "third-party model" regarding intermediaries like exchanges. This legal gray area regarding whether intermediaries can pass on yields to users has become a key basis for banks to demand loophole closures.

The banking sector strongly asserts that stablecoin rewards will divert deposits and weaken the funding sources for households and businesses. Standard Chartered Bank estimates that by the end of 2028, stablecoins could withdraw $500 billion in deposits from U.S. banks, with small and medium-sized banks being the most affected.

The American Bankers Association further leveraged poll results, stating that over 60% of respondents support measures to protect community banks from the impact of stablecoins.

Conversely, the cryptocurrency industry argues that this is bank protectionism and that stablecoin reserve requirements are far stricter than those for banks. Incentives related to payments and wallets can drive digital dollars into mainstream finance.

The White House attempted a compromise, allowing peer-to-peer payment rewards while prohibiting interest on idle balances. The cryptocurrency side accepted this, but banks rejected it, directly causing the Senate negotiations to collapse.

Even if Congress does not act, regulators are ready to intervene, with the Office of the Comptroller of the Currency planning to treat interest paid by related parties as if it were paid directly by issuers, circumventing legislative tightening on the distribution of yields.

The legislative time window is extremely tight. The head of research at Galaxy Digital pointed out that the "CLARITY Act" must pass through the committee by the end of April and be submitted for full house review by early May, otherwise the chances of passing by 2026 are slim. Even if the yield dispute is resolved, it still faces multiple obstacles such as DeFi regulation and regulatory authority.

Market sentiment predictions have significantly cooled, with Polymarket's probability of the bill passing dropping from 80% at the beginning of the year to 50%, while Kalshi estimates the likelihood of passing before May at just 7%.

This bill not only concerns stablecoin yields but also clarifies the securities/commodity attributes of cryptocurrency tokens and builds a complete regulatory framework.

If the bill fails, the industry will continue to rely on regulatory guidance and policy changes, entering a stage of self-verification in a real-world application, with growth depending on market acceptance rather than legislative expectations; if it passes smoothly, regulatory certainty will quickly boost the market, and the growth of stablecoins and tokenization will be reflected in asset prices ahead of time.

Now the controversy has escalated to the operational rules and profit distribution of stablecoins within the financial system. If Congress cannot advance legislation in the spring, regulators will delineate boundaries themselves, and the development space for stablecoins and the industry landscape will become set.