Why the CLARITY Act crypto Bill Is Stuck in 2026

Washington — The future of U.S. crypto regulation has entered a critical phase as the CLARITY Act crypto bill encounters unexpected turbulence. What was once seen as a rare example of bipartisan cooperation is now slowed by a growing dispute between traditional banks and digital asset companies over one highly contentious issue: whether stablecoin issuers should be allowed to offer yield on dollar-backed tokens. At the center of the standoff is a series of high-level discussions hosted at the White House, where industry leaders and banking officials have gathered ahead of a looming March 1 deadline. While the tone of the negotiations has been described as constructive, insiders say the debate over interest payments on stablecoins like USDC has complicated broader talks surrounding the CLARITY Act crypto framework.

Stablecoin Yields Become the Flashpoint

Stablecoins, digital tokens pegged to the U.S. dollar, have become a foundational component of the crypto ecosystem. Companies such as Coinbase and Ripple argue that offering yield to users helps drive adoption, strengthens liquidity, and accelerates innovation in digital finance. Banks, however, see things differently. Traditional financial institutions contend that allowing stablecoin issuers to distribute interest could undermine the regulated banking system. According to banking representatives, deposit protection frameworks exist to shield consumers and preserve financial stability. If digital dollar issuers begin functioning like banks—without being subject to identical oversight—it could create systemic risk. This disagreement has become a roadblock in finalizing legislative language tied to the broader CLARITY Act crypto proposal.

High-Profile Leaders Step In

The White House meeting brought together some of the most influential figures in digital finance. Among them was Paul Grewal, Chief Legal Officer of Coinbase, who later described the talks as “respectful and steady.” After the session, Grewal shared updates publicly, emphasizing that progress had been made even though no final agreement was reached. Grewal also met with Patrick Witt during the discussions. Observers familiar with the conversation noted that both sides appeared willing to narrow differences, even if the stablecoin yield question remains unresolved. Journalist Eleanor Terrett reported that additional crypto leaders attended the meeting, including Stuart Alderoty and Miles Jennings. Jennings represents interests aligned with Andreessen Horowitz, a major venture capital investor in blockchain startups. The presence of these executives underscores the magnitude of what is at stake. For crypto firms, the bill is more than just regulatory housekeeping—it represents long-sought federal clarity that could determine the industry’s trajectory for years.

Why Yield Matters So Much

The debate centers on whether token issuers should be permitted to distribute earnings generated from reserves backing dollar-pegged coins. Crypto companies argue that stablecoin reserves, often invested in short-term Treasury instruments, naturally generate returns. Allowing issuers to pass some of that yield to consumers, they say, is simply a fair extension of market principles. In their view, prohibiting yield payments would stifle competition and slow innovation. Banks counter that interest-bearing stablecoins could draw deposits away from federally insured institutions. That shift, they argue, could weaken the traditional banking model that supports lending, consumer protection, and economic stability. This single provision has created friction strong enough to delay final alignment on the CLARITY Act crypto legislative package.

Political Momentum Meets Legislative Reality

Despite current tensions, optimism remains surprisingly high in some corners of the market. Prediction platform Polymarket shows rising confidence that crypto-related market structure legislation could pass this year. Traders recently pushed approval odds as high as 83%, reflecting growing belief that negotiations will ultimately succeed. Industry executives share that optimism. Brad Garlinghouse, CEO of Ripple, predicted that lawmakers have an 80% to 90% chance of advancing legislation by March 1, with the possibility of final enactment by April. He noted that White House engagement signals a strong desire to keep momentum alive. Similarly, Brian Armstrong, CEO of Coinbase, expressed confidence that a workable compromise can be found. Armstrong emphasized that both banks and crypto firms have valid concerns, and he framed the talks as part of a natural maturation process for digital assets within the broader financial system.

Still, optimism does not eliminate political hurdles.

A Bill with Bipartisan Roots

Last year, the United States House of Representatives passed the legislation with bipartisan backing, marking one of the most significant crypto policy victories in recent memory. Lawmakers from both parties agreed that digital asset markets require a coherent federal structure to replace the patchwork of enforcement actions and state-level rules currently in place. However, Senate approval remains uncertain. The United States Senate must now evaluate its own version of the legislation. The Senate Banking Committee is expected to hold hearings before any final vote. Meanwhile, the Senate Agriculture Committee has already approved a separate version, though its vote followed party lines rather than reflecting broad bipartisan unity. Democratic support will prove essential for final passage. Without it, the measure could stall indefinitely.

Industry Pressure Builds Ahead of Deadline

With March 1 approaching, negotiators face intensifying pressure to resolve outstanding disputes. Crypto leaders argue that continued regulatory ambiguity drives innovation offshore, encouraging startups to relocate to jurisdictions with clearer frameworks. Banks, meanwhile, insist that regulatory guardrails must not be weakened in the name of innovation. Their representatives maintain that deposit protection and financial stability are non-negotiable pillars of the U.S. economy. This balancing act has transformed the CLARITY Act crypto debate into a broader philosophical contest over the future of finance.

Market Implications Beyond Stablecoins

Although the immediate disagreement centers on stablecoin yields, the implications stretch much further. The bill aims to define oversight responsibilities between agencies, clarify token classifications, and establish compliance pathways for exchanges and issuers. For institutional investors, clarity could unlock billions in sidelined capital. Pension funds, asset managers, and banks have largely waited for federal rules before deepening exposure to digital assets. Bitcoin and other major cryptocurrencies have responded positively to signs of progress. Analysts note that legislative certainty tends to reduce volatility and attract long-term capital. If the current stalemate delays passage, however, markets could experience renewed uncertainty.

White House Strategy: Mediation or Momentum?

Administration officials appear keen to maintain a mediator role rather than taking sides. Observers describe the White House’s approach as pragmatic—seeking compromise while preserving political capital. By hosting multiple sessions, the administration signals that digital asset regulation remains a priority. This marks a notable shift from earlier years, when federal engagement often came primarily through enforcement actions rather than legislative collaboration. The third White House meeting focused specifically on yield restrictions, suggesting that officials see this issue as the final major obstacle before broader consensus can emerge.

The debate surrounding stablecoin yields has transformed what once seemed like a straightforward bipartisan effort into a high-stakes negotiation between banks and crypto companies. As White House meetings continue and Senate committees prepare for action, the fate of landmark digital asset legislation hangs in the balance. Whether compromise arrives before the March 1 deadline or talks stretch further into the year, one fact remains clear: the decisions made now will shape the regulatory and financial landscape for years to come. The industry, lawmakers, and markets alike await the next chapter in the evolving story of American crypto policy.

Disclaimer: CryptopianNews shares this for learning and info only. It’s not meant to be financial or investment advice. Crypto markets change a lot and move quickly. Investing in them can be risky. You should always look into things yourself. Talk to a trained financial advisor before making any choices about investing.