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- Coinbase and banks are at an impasse over whether stablecoins can offer interest, stalling the entire bill.
- Lawmakers remain split on whether the SEC or CFTC should oversee the majority of digital asset transactions.
- The ongoing legislative uncertainty has contributed to nearly $1 billion in capital fleeing the U.S. crypto markets.
The high-stakes race to regulate the American digital asset market has entered a volatile new phase. As February 2026 unfolds, the CLARITY Act—a legislative package designed to finally provide a federal framework for the crypto industry—remains stuck in a tug-of-war between partisan politics, banking lobbyists, and crypto executives.
What began as a swift legislative push last year has slowed to a crawl. While the House of Representatives cleared the bill in July 2025 with a comfortable 294-134 margin, the Senate has proven to be a much tougher arena. The primary friction points? A heated debate over stablecoin yields and a fundamental disagreement on which agency should hold the leash: the SEC or the CFTC.
The Yield War: Banks vs. Coinbase
The most significant hurdle is a showdown over stablecoin yields. Traditional banking giants, fearful of losing deposits to high-interest digital assets, are lobbying for a total ban on interest-bearing stablecoins. They argue that these products threaten the stability of the traditional financial system.
On the other side, industry titans like Coinbase have withdrawn support for recent drafts, with CEO Brian Armstrong stating he’d rather have “no bill than a bad bill.” The industry contends that banning yields stifles innovation and pushes investors toward offshore markets.
Political Gridlock and Ethical Hurdles
The path to passage was further complicated by the longest federal government shutdown in history late last year. Even with the lights back on, the Senate Banking Committee remains divided. Senator Elizabeth Warren and other Democrats are pushing for strict ethics provisions and a “no bailout” clause for crypto firms—demands that many Republicans have rejected.
Furthermore, the “Agriculture Committee” draft released in late 2025 has added another layer of complexity, as lawmakers still can’t agree on whether the SEC or the CFTC should be the primary watchdog for the sector.
Also Read: White House Brokers Crypto-Bank Truce as CLARITY Act Faces Crucial Test
A Race Against the Election Clock
With the 2026 midterm elections approaching, the window for a bipartisan deal is closing. Crypto PACs, armed with massive war chests, are watching closely to see which lawmakers will champion their cause before the campaign cycle kicks into high gear.
Market analysts warn that the cost of delay is already tangible; reports suggest nearly $1 billion in outflows from the crypto market as investors grow weary of the uncertainty. For the U.S. crypto industry, the CLARITY Act is no longer just about rules—it’s a race for survival in a global market that isn’t waiting for Washington to make up its mind.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
