What To Know:
- Bernstein says the US Clarity Act’s fate now hinges on whether crypto platforms can offer yield on stablecoins, rather than on broader regulatory definitions.
- Banks warn rewards could drain deposits as the stablecoin market grows, while crypto firms argue limits would undermine competition and past legislative compromises.
- Without a near-term compromise, Bernstein cautions the bill could stall or fail, especially as midterm election dynamics approach.
Wall Street research firm Bernstein has warned that the window for passing a comprehensive US crypto market structure bill is narrowing, as lawmakers become increasingly entangled in a standoff between the banking sector and the crypto industry over stablecoin rewards.
Bernstein Weighs In on US Crypto Bill
In a note circulated to clients on Monday, analysts led by Gautam Chhugani said the fate of the Digital Asset Market Clarity Act of 2026, commonly referred to as the Clarity Act, now hinges less on long-debated regulatory definitions and more on a single unresolved issue, i.e., whether crypto platforms should be allowed to offer yield on stablecoin balances.
According to Bernstein, disagreements over how crypto should be classified or how decentralized finance should be regulated, while politically sensitive, are unlikely to derail the bill. Those debates have been going on for years and are broadly understood by lawmakers on both sides of the aisle. The stablecoin rewards question, but has emerged as a sharper fault line with fewer signs of compromise.
The dispute follows the passage of last year’s GENIUS Act, which President Donald Trump signed into law. That law prohibited stablecoin issuers from directly paying yield to holders, a concession aimed at addressing concerns from banks and regulators.
It also allowed crypto platforms and affiliated entities to give rewards to their users — typically 2% to 4% per year. Today, that carve-out attracts fierce lobbying. Banks say these benefits threaten traditional deposits more aggressively. They warn that because the stablecoin market is already exceeding $275 billion, this growth could push the sector into the trillions, making it systemic within the financial system. From their standpoint, platform-based incentives motivate consumers to withdraw from banks, sapping one of the pillars of the current financial structure.
The crypto world has very different ideas of the issue. To revive the debate over stablecoin yield, the industry representatives say, would risk the unraveling of the legislative compromise that enabled the GENIUS Act in the first place. They assert that attempts to limit payouts and rewards at the platform level are anti-competitive and misaligned with the principles of free-market competition, especially with U.S.-based firms facing pressure from rivals operating in more permissive regimes.
Both camps, Bernstein said, see it as a red line. That rigidity increases the likelihood that if lawmakers cannot navigate an agreement in the coming months, the Clarity Act could potentially be delayed or ultimately fail. Political timing is another factor driving up the pressure.
The bill needs to demonstrate real progress on that metric by the second quarter of 2026, the firm said, in case it is overshadowed by changes in priorities and uncertainties connected to U.S. midterm elections.
The Clarity Act is intended to outline an unambiguous regulatory structure for digital assets in the United States. It would split oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, categorizing most tokens as digital commodities instead of securities. The bill would also establish a CFTC-led regime for digital commodity exchanges, limit registration requirements for crypto platforms, and take a lighter-touch approach to decentralized protocols that rely mostly on anti-fraud enforcement. Proponents say the legislation would also spur innovation, domesticize crypto activity, and simplify U.S. token listings.
The bill cleared the House of Representatives last July and is now moving through the Senate. Drafts have been prepared by both the Banking Committee and the Agriculture Committee, which oversee the securities and commodities components of the proposal. Markup sessions, where amendments are debated and voted on, are expected soon. Both committees must approve the bill before it can advance to a full Senate vote.
Also Read: US Senate Sets Jan. 15 Vote on Crypto Market Structure Bill
