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- The CLARITY Act could define U.S. stablecoin regulation for years.
- Banks fear crypto rewards could pull deposits from traditional finance.
- Market confidence is slipping as the legislative deadline approaches.
Momentum around the CLARITY Act is building, but so are tensions between the crypto industry and traditional finance. After a third round of talks led by the White House, negotiators appear closer to a compromise, though major obstacles remain ahead of the administration’s March 1 deadline.
Officials say discussions are narrowing the gap between crypto firms and banking groups, yet disagreement over stablecoin rewards continues to dominate the debate — and could determine whether the bill moves forward or stalls again.
Crypto Firms vs. Banks: A Clash Over Stablecoin Rewards
Leading crypto companies including Coinbase, Ripple, and Andreessen Horowitz are pushing to preserve features that make stablecoins attractive, such as programmability and user incentives.
Banking groups like the American Bankers Association and the Bank Policy Institute argue that allowing crypto firms to offer yields could draw deposits away from banks, potentially weakening financial stability.
To the crypto sector, however, the push to restrict rewards looks like an attempt to shield banks from competition. Industry advocates warn that banning incentives could slow innovation and limit consumer choice.
Tougher Enforcement Signals Emerging
The latest draft of the CLARITY Act suggests regulators are leaning toward tighter oversight rather than compromise. If companies attempt to disguise interest as rewards, enforcement could come from agencies including the Securities and Exchange Commission, the US Department of the Treasury, and the Commodity Futures Trading Commission.
Penalties could reach $500,000 per day, underscoring the administration’s intent to keep stablecoin activity aligned with existing financial rules.
Still, the bill’s fate may hinge on Tim Scott, who has yet to reschedule a key legislative meeting. Without progress soon, the proposal risks falling back into political limbo.
Market Confidence Begins to Slip
Investor sentiment has turned more cautious. Odds of passage on Polymarket dropped sharply in a single day, while analytics from Santiment suggest traders increasingly expect delays.
Also Read: Is Your Crypto Safe? The CLARITY Act Delay That’s Costing Billions
Despite this, some industry leaders remain optimistic. Brad Garlinghouse recently said the bill could still pass as early as April, reflecting hopes that once a breakthrough comes, broader crypto legislation could advance quickly.
The CLARITY Act represents more than another regulatory proposal — it’s a test of whether Washington can finally establish firm rules for digital assets. With banks, crypto firms, and regulators all pulling in different directions, the coming weeks may determine not only the bill’s future but the shape of the U.S. crypto market for years to come.
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!
