The US crypto regulation is still facing challenges as the CLARITY Act passage remains uncertain amid mounting clashes over stablecoin yields. Even as the White House and Senate signaled support for the stablecoin proposal, lawmakers and industry leaders remain at odds. Experts state that this unresolved debate is the “main blocker” in the passage of the crypto bill.
Stablecoin Yield Debate Stalls CLARITY Act
According to the latest reports, the CLARITY Act is stuck in limbo as disagreements over the stablecoin rewards program persist. Industry experts claim that the debate has stalled progress on the US crypto legislation for over a year and shows no sign of ending.
Jason Somensatto, policy director at Coin Center, described the current stablecoin debate as the main hindrance to the final passage of the CLARITY Act. He added that once resolved, other issues could be quickly settled. Somensatto noted that if the debate comes to an end, there will be a “mad rush to resolve any other issues that might be out there before going to markup.”
According to the current form of the bill, crypto platforms can provide rewards for stablecoins. Banks worry that allowing such yields could drain deposits from traditional institutions. Meanwhile, crypto firms argue that restricting rewards would stifle innovation.
Industry Pushback Adds to Legislative Roadblocks
Despite a broader support from the crypto industry, major players like Coinbase are pushing back against the CLARITY Act. In January, the crypto exchange withdrew its support for the market structure bill, sparking speculation. The company cited concerns over stablecoin yields, tokenized equities, DeFi, and regulatory clarity.
Recently, the White House and Senate agreed on an amended proposal on stablecoin yields. As per the proposal, crypto service providers will not be able to provide yield on stablecoin balances directly or indirectly.
As the Senate released the amended proposal, Coinbase expressed its opposition. The exchange noted that it cannot support the bill.
Major figures like Tim Scott say that the crypto industry’s full support will be necessary for the final approval of the market structure bill. Even though the CLARITY Act now boasts bipartisan support, objections from major crypto players could still delay its passage or force significant changes to the legislation.
However, Scott remains optimistic as the crypto bill has gained support from both Democrats and Republicans. He stated,
“We now have Republicans and Democrats working together. The White House agrees as well. I am very optimistic about where we are.”
Peter Van Valkenburgh, executive director at Coin Center, noted that despite ongoing talks, any proposed deal often faces pushback from either banks or Coinbase, keeping the impasse intact. In addition to this, the departure of David Sacks from the position of AI and crypto czar has also cast a shadow over the crypto bill’s future.
However, now all eyes are on April 13. With bipartisan support, the market structure bill is heading to the next markup meeting. While a majority think that the crypto bill would pass on the day, others remain pessimistic due to the ongoing debate.