The Senate recess is just a few weeks away, and lobbyists only need to buy time.

Written by: Thejaswini M A

Translated by: Block unicorn

The American Bankers Association recently walked into the Senate, looking everyone in the eye, claiming that if we allow stablecoin payments to yield a small return, banks will lose $6.6 trillion. Faced with such a horrifying financial apocalypse, the senators all pressed the "pause" button.

Mission accomplished. In Washington D.C., you only need enough sweet talk to ensure the status quo is maintained during this session. No need to win the debate.

As the senators asked questions, the White House released its own report. The results showed that the banks' so-called "great deposit migration" … was a bit of a stretch.

The White House report indicated that banning stablecoin yields would increase bank lending by $2.1 billion, which only accounts for 0.03% of the total. This small protectionist measure would cost consumers about $800 million. The banks' judgment is flawed. More importantly, this is costly for the American public. However, this bill has remained long-stalled in the committee's deliberation room.

The banking lobby knows that the most powerful force in the universe is a senator's desire to hit the beach.

The Senate recess is just a few weeks away, and lobbyists only need to buy time. Now, this bill is gathering dust in the committee room, banks have frozen deposits, and the rest of us have to pay for the delays.

Today, we are discussing the last nine weeks of a four-year marathon.

In July 2025, Congress passed the GENIUS Act, which contained two provisions: one regulating stablecoins, and the other prohibiting stablecoin issuers from paying interest. This was a huge victory for banks, as they successfully argued that if people could choose between a stablecoin yielding 5% and a bank yielding 0.01% plus a "free" toaster, the entire global economy would collapse. Congress feared math and quickly signed the bill.

But the GENIUS Act has a loophole. While issuers cannot pay interest, their "affiliates" and exchanges can still offer "rewards." Cryptocurrency companies rushed in because they liked making money, while banks immediately started reporting because they hated competition.

Next, we will discuss the Clarity Act. This bill has been touted as a "cure-all" aimed at closing legal loopholes and ultimately determining whether the SEC or the CFTC would regulate decentralized finance (DeFi). The bill passed in the House with an overwhelming majority of 294 votes, with bipartisan support.

Subsequently, the topic was submitted to the Senate Banking Committee and ultimately became a "permanent lawn ornament" there.

A hearing scheduled for January was all set, but North Carolina Senator Thom Tillis asked Chairman Tim Scott to give more time for negotiations with banking groups to reach a compromise, and this plan was rejected. "For me, it's crucial not to accelerate the process," Tillis told reporters, "to hear from all parties and provide them with a reasonable rationale for what we accept and what we do not." The North Carolina Bankers Association has been actively communicating with his office for weeks. Senator Tillis represents North Carolina. What a coincidence.

At the Bitcoin 2026 conference held two weeks ago, Senator Cynthia Lummis warned that while the Clarity Act is 99% complete, it is also precarious. If the window is missed this year, the bill will die and the new Congress in 2030 will have to start the lengthy and arduous legislative process from scratch.

The Senate is currently in recess, which means the earliest deliberation won't occur until the week of May 11. With only nine working weeks left, time is very tight. Galaxy Digital currently estimates the likelihood of passage at 50%, which may still be a rather optimistic estimate.

Can stablecoins pay yields? This is a tricky question.

The compromise brokered by Senators Tillis and Ossoff attempts to make a one-size-fits-all solution. It prohibits "passive yields" but allows "activity-based rewards."

Prohibited: Rewards for merely holding stablecoins (too similar to bank accounts)

Allowed: Rewards for using cryptocurrencies (cryptocurrency "credit card points")

But to date, no one has been able to find a definition that satisfies both bankers and the cryptocurrency community. This ambiguity presents a golden opportunity for the banking lobby. With each week wasted debating semantics, we get closer to the August recess. The White House is no longer pretending to be neutral. An analysis report released by the Council of Economic Advisers in April pointed out that the banks' arguments were wrong. Patrick Weller from the White House Crypto Committee described the banks' pressure as "greed or misunderstanding," but did not specify which one.

The cryptocurrency industry has historically failed to defend itself well. In January of this year, Brian Armstrong of Coinbase withdrew his support for cryptocurrencies, which undoubtedly provided all Democrats looking for reasons to vote against an excellent excuse.

Now, David Sacks has assumed a broader advisory role, leaving Patrick Weller and the White House crypto committee with the heavy lifting. They are endeavoring to maintain optimism, claiming that this delay is merely an opportunity to "resolve differences," and that we are "closer to the goal than ever before." While this sounds nice, it overlooks one fact: In politics, even standing at the finish line, if time is up, it’s all meaningless.

Meanwhile, the market continues to develop without any permission. Morgan Stanley launched MSNXX, a money market fund specifically set up under the GENIUS Act to manage stablecoin reserves. Coinbase launched CUSHY, a stablecoin credit fund whose shares are tokenized. Agora is applying for a banking license. Products are released with additional conditions, compliance teams keep adding restrictions, and innovation emerges not from clear regulations, but from uncertainty.

The threat of deposits that banks are vigorously lobbying against does not seem to be affected by the lobbying. Standard Chartered Bank predicts that regardless of whether yields are allowed, banks might lose $1.5 trillion in deposits due to stablecoins by 2028.

The commitment of Senator Ossoff proposed in March for "universal dissatisfaction" aims to signal a breakthrough. But in the currently recessing Senate, a compromise that leaves everyone dissatisfied often serves as an excuse for inaction.

The yield ban may slow down the flow of funds, but no amount of lobbying can resolve the fundamental issues with the products themselves. For example, the 4.5 percentage point gap between savings account yields and stablecoin yields is a typical example.

If the Clarity Act fails this summer, the next Congress will have to start from scratch in 2027. By then, new bills will be drafted, negotiated, lobbied against, and the deliberation process will be scheduled, rescheduled, and postponed again. By 2030, the banks will be asking for more time. Senator Tillis, or his successor, will insist not to rush.

By then, the stablecoin industry will be larger, the regulation will be looser, and the interest in seeking permission will also greatly decline.