Lobbying Slows Clarity Act, Raising Risk U.S. Crypto Overhaul Slips to Next Congress

The U.S. Senate Banking Committee had aimed to vote on the Clarity Act—a sweeping cryptocurrency market-structure bill—by the end of April. Banking-industry lobbying is now pushing the schedule into May, increasing the risk that broader election-year politics could freeze progress and force digital-asset regulation into the next Congress. On April 14, Committee Chair Tim Scott said on Fox Business that work may not wrap up in April, pointing to three unresolved items: rules around stablecoin yields, remaining DeFi-related language, and securing support from all Republican senators on the committee. Under committee procedure, a vote during the week of April 27 would require a notice of consideration no later than April 25. The panel’s calendar is also constrained by an April 22 confirmation hearing for Kevin Warsh, President Trump’s nominee for Federal Reserve Chair. Senator Bernie Moreno warned that if the bill does not reach a full Senate vote before May, the midterm election cycle will make major legislation politically difficult, potentially delaying digital-asset rules until the next Congress. At the center of the dispute is whether stablecoin issuers should be allowed to pay yield to holders. After more than two months of talks, Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks reached a late-March compromise: ban "passive" yield earned simply by holding stablecoins, while allowing rewards tied to onchain activity such as payments and transfers. The crypto industry has largely accepted the framework, with no public pushback. Crypto In America reported the compromise text was not released publicly and was instead shared privately with bank and crypto representatives. Banking groups initially responded ambiguously, but opposition intensified after the White House Council of Economic Advisers (CEA) published an April 8 report arguing stablecoin yields pose limited risk to the banking system. Punchbowl News reported that the North Carolina Bankers Association mobilized member banks to call Tillis’s office, and that banking trade groups broadened lobbying to other members of the committee beyond Tillis and Alsobrooks. Tillis has signaled openness to bank concerns, proposing a "crypto palooza" session last week to bring bank and crypto experts together in person, though such talks would further slow the process. On April 17, Tillis said he would not release the compromise text, citing uncertainty around the markup timeline. Patrick Witt, executive director of the White House Crypto Commission, criticized the banking industry’s continued lobbying on X: "It’s hard to interpret further lobbying as anything other than greed or ignorance." A source familiar with the discussions told Eleanor Terrett: "Small banks across the country are not being well served by Washington trade associations. The banking lobby can accept this outcome and curb deposit outflows, or they can sabotage their own impending victory and end up facing the status quo." CEA numbers: a 0.02% impact Key ammunition in the debate is the CEA’s April 8, 21-page analysis. The report estimates that a full ban on stablecoin yields would lift total bank lending by about $2.1 billion—roughly 0.02% of outstanding loans. For community banks seen as most exposed to deposit outflows, the incremental lending capacity would be about $500 million, a 0.026% increase. The CEA also estimates the ban would impose a net cost of about $800 million on consumers. The thrust of the report: claims that stablecoin yields threaten deposit bases are not supported by the data. Terrett reported that the American Bankers Association (ABA) publicly criticized the CEA’s stablecoin analysis, calling its approach misguided and arguing it missed deeper policy risks. The ABA warned that permitting yield could accelerate deposit outflows from community banks, raise funding costs, and tighten local credit. It also argued the CEA’s focus on the effects of a yield ban creates a false sense of security while sidestepping scenarios such as rapid scaling of interest-bearing payment stablecoins. The ABA has previously warned stablecoin yields could drive up to $6.6 trillion in deposit outflows. Two other sticking points: DeFi and ethics language Stablecoin yield is the most visible dispute, but Scott has highlighted two additional hurdles. DeFi provisions remain under negotiation. Democratic senators, citing recent security incidents—including the theft of roughly $290 million from Kelp DAO in April and $285 million from Drift Protocol—are pressing for tougher anti-money laundering and sanctions-compliance language, especially for decentralized protocols with strong anonymity features. Scott said DeFi disagreements could be resolved within two weeks, though that timeline depends on the stablecoin-yield fight not dragging on. Ethics provisions are also contentious. Democrats want restrictions preventing senior government officials from personally benefiting from crypto assets while in office. The issue is particularly sensitive amid controversy involving the World Liberty Financial (WLFI) project linked to the Trump family. Republicans argue some proposals are too broad and could be weaponized politically. A narrowing legislative runway Before becoming law, the Clarity Act still faces multiple steps: Banking Committee review and vote, a 60-vote threshold in the full Senate, reconciliation with the Agriculture Committee’s version, alignment with the House-passed version approved in July 2025, and the president’s signature. With the midterm cycle approaching, each stage compresses the window. The Clarity Act is positioned as the first comprehensive U.S. crypto market-structure framework, intended to clarify SEC and CFTC jurisdiction over digital assets and set clearer rules for token classification, exchange registration, and custody compliance. The House version passed in July 2025, and the Senate Banking Committee’s pace will determine whether the bill can be enacted this session. Ripple CEO Brad Garlinghouse had previously expected finalization in April, later shifting his outlook to the end of May. After the Warsh hearing, whether the committee issues a markup notice by Friday will signal whether consideration can begin in late April or slips until after the Senate returns from its mid-May recess. Further slippage would leave limited time to clear the remaining hurdles before election-year politics takes over.