A coordinated push to enact the CLARITY Act is colliding with a rapidly closing legislative window, prompting warnings from industry advocates that failure to pass the bill this spring could delay crypto developments until the end of the decade.
With the November 2026 midterm elections approaching, the legislative calendar is shrinking and the complex jurisdictional divide between the federal finance commissions threatens to derail a bill months in the making.
The CLARITY Act, which passed the House of Representatives in July 2025, remains bogged down in the Senate amid an intense lobbying war between traditional financial institutions and the digital asset industry over the treatment of yield-bearing stablecoins.
Crypto advocates are sounding the alarm: If the Senate Banking Committee doesn’t schedule an increase soon, the legislation will be consumed by election-year politics.
In an X-post, Senator Cynthia Lummis echoed growing concerns in the digital asset space, warning:
“This is our last chance to pass the Clarity Act until at least 2030. We cannot afford to give up America’s financial future.”
It is striking that market sentiment already reflects this pessimism. Bettors on decentralized prediction platform Polymarket currently put the odds of the CLARITY Act passing this year at 58%, down sharply from 82% in February.
On Kalshi, traders predict only a 13% chance that the legislation will pass before June, 28% before July, and a 62% chance that it will remain unresolved until 2027.
A changing consensus within the sector
Despite the tightening timeline, the crypto industry is presenting an increasingly united front, driven by a series of high-profile reversals.
The most notable shift comes from Coinbase CEO Brian Armstrong, who earlier in January withdrew his support for the Digital Asset Market Clarity Act amid disputes over the bill’s language on tokenized equity, ethics provisions and stablecoin revenues.
That withdrawal was highly influential, contributing to the Senate Banking Committee’s decision to postpone a previously scheduled markup vote. Now Armstrong is publicly urging lawmakers to go further.
Armstrong’s change in attitude immediately followed an op-ed published in the Wall Street Journal by US Treasury Secretary Scott Bessent, who called on Congress to finalize the regulatory framework without further delay.
Addressing X, Armstrong explicitly supported the Treasury Department’s position, stating that months of aggressive negotiations had strengthened the text. He stated:
“It’s time to pass the Clarity Act.”
Coinbase Chief Policy Officer Faryary Shirzad also reinforced this optimism last week, noting that the largest US-based crypto trading platform was “ready to do our part to make this happen.”
The exchange’s new decision comes as bipartisan negotiators inch closer to a comprehensive deal.
The Senate Agriculture Committee passed its portion of the legislation in January on a narrow 12-11 vote, led by Senator John Boozman.
However, this language should be aligned with the securities-oriented components under the purview of the Senate Banking Committee, which has not yet taken action.
The battleground for stablecoin yields
The main sticking point preventing a full vote in the Senate remains a bitter clash over market liquidity and the fundamental mechanics of stablecoins.
Traditional banking lobbies and crypto executives fundamentally disagree over whether stablecoin issuers should be allowed to pass on proceeds to their users.
For the traditional banking sector, the concern arises from the deposit flight mechanism.
The American Bankers Association (ABA) argues that if stablecoins function as high-yield, easily accessible digital assets, they could trigger a massive outflow of retail and commercial deposits from the traditional banking system.
When smaller, regional community banks lose these low-cost deposits, they are forced to quickly replace funding to continue their lending activities. This is typically accomplished through large-scale, higher-cost borrowing, such as tapping Federal Home Loan Bank advances or turning to the capital markets.
The ABA argues that allowing stablecoin rewards under the CLARITY Act would inevitably undermine net interest margins, forcing banks to increase deposit rates and ultimately reduce credit availability and increase financing costs for small businesses.
To neutralize the banking lobby’s narrative, the executive branch has launched an unprecedented multi-agency pressure campaign.
The centerpiece of this effort is a recently released report from the White House Council of Economic Advisers. The CEA’s macroeconomic analysis directly challenged the ABA’s warnings and concluded that the systemic risks of stablecoin interest rates have been vastly overestimated.
According to White House economists, banning interest on stablecoins would increase total U.S. bank lending by just $2.1 billion. Measured against the vast $12 trillion U.S. lending market, the CEA has framed this as a negligible shift of 0.02%, with community banks expected to capture just $500 million of that total.
Conversely, the report warned that banning yields would be a punitive measure against American consumers, resulting in an estimated $800 million in annual welfare losses by depriving them of the default interest on their digital assets.
The ABA immediately fired back when the Senate returned from its two-week recess. The banking group accused the White House of following the crypto industry’s favorite narrative by treating a yield ban as an “intervention” and focusing on the wrong macroeconomic questions.
According to ABA:
“By focusing on the effects of a ban, the CEA document risks creating a misleading sense of security by avoiding the much more consequential scenario: stable coins that generate returns and scale quickly.”
The group emphasized that the real threat is not a lack of system-wide reserves, but whether smaller banks have the balance sheet flexibility to absorb sudden outflows without abruptly cutting back on lending.
It added:
“The baseline that does the work in the CEA document – currently an immature stablecoin market of around $300 billion – will not resemble a future market that will reach $1-$2 trillion. In a larger market, yield is not a minor product feature; it is the mechanism that would accelerate migration out of bank deposits.”
A ruthless calendar and electoral risks
As lobbyists spar over balance sheets, the ultimate threat to the CLARITY Act is the 2026 calendar.
Senate Banking Committee Chairman Tim Scott has yet to officially schedule an increase date, though advocates like Sen. Bill Hagerty have expressed optimism that the committee could introduce the bill before the end of April.
Institutional analysts note that the chance of error is virtually nil. Justin Slaughter, vice president of Paradigm Affairs, pointed out that the procedural mechanics of a Senate vote generally take two to three weeks.
He stated that the bill must receive approval from the banking committee in mid-May to secure a vote before Memorial Day.
However, if the legislation continues into the summer, the political landscape will change dramatically.
The Senate schedule includes extended non-legislative periods from August 10 to September 11 and again from October 5 through the general election on November 3.
Meanwhile, Senate candidate John E. Deaton has warned that failure to act could be fatal to crypto innovation. He said the regulatory environment could shift sharply if the bill stalls and the November elections result in a shift in Senate control.
Deaton warned that a change in leadership of the Senate Banking Committee, which could potentially appoint crypto-sceptic Senator Elizabeth Warren as chair, would almost certainly shift the committee’s focus to strict enforcement rather than structural market innovation.
As Washington’s attention inevitably shifts to the post-July 4 campaign season, the coming weeks will determine whether the digital assets industry secures a long-awaited regulatory framework, or whether the U.S. market will have to wait another four years in the legislative arena.