CLARITY Act crypto bill nears finish line

TLDR

The CLARITY Act, a sweeping U.S. crypto market-structure bill, is now close to Senate markup after a compromise on stablecoin yields, but it is not guaranteed to become law.

1. The bill would split oversight between SEC and CFTC and tightly define when stablecoins and other digital assets can offer rewards.
2. A new bipartisan deal bans interest-like yield on passive stablecoin balances while allowing activity-based rewards, drawing support from major crypto firms and pushback from large banks.
3. The next few weeks are critical, as Senate Banking Committee action and election timing will largely determine whether the bill passes in 2026.

Deep Dive

1. What The CLARITY Act Actually Does

The Digital Asset Market Clarity Act of 2025 (CLARITY Act) is designed to create a comprehensive federal framework for U.S. crypto markets. It would clearly divide jurisdiction between the SEC and CFTC, giving the CFTC explicit authority over spot markets in digital commodities and related intermediaries, while leaving securities-like tokens under SEC oversight.

The bill also addresses stablecoins, tokenized equities, prediction markets and ethics rules for policymakers dealing with digital assets. By codifying an asset taxonomy and responsibilities, it aims to replace case-by-case enforcement with rules that crypto exchanges, issuers and DeFi platforms can follow more predictably.

2. Stablecoin Yield Compromise And Who It Hits

The most contentious piece has been stablecoin rewards. A recent bipartisan compromise from Senators Thom Tillis and Angela Alsobrooks bans rewards that are economically or functionally equivalent to bank deposit interest, while allowing genuine usage-based rewards such as trading or transaction incentives on compliant platforms. This is laid out in Section 404 of the draft, which targets passive yield on just holding payment stablecoins.

Large banking lobbies argue the language still leaves loopholes for yield-like programs and warn of potential deposit flight from traditional banks, while major crypto firms like Coinbase and Circle have publicly swung behind the compromise as a workable balance. Some versions also give the Treasury Secretary significant interpretive authority over yield rules, introducing a powerful policy lever for future administrations.

3. Timeline, Politics, And Remaining Risks

Procedurally, the bill passed the House in 2025 and cleared the Senate Agriculture Committee, but it still needs a Senate Banking Committee markup and then a full Senate vote before returning to the House for final alignment and a presidential signature. Senators and industry figures expect Banking Committee markup in May 2026, with several noting that a slip beyond early summer sharply lowers passage odds because midterm election campaigning will dominate the calendar.

Risks remain. Large banks are lobbying to tighten the yield language, civil liberties and DeFi advocates are fighting over money-transmission and developer liability provisions, and at least one Republican senator is reportedly using support as leverage in an unrelated housing bill fight. Prediction markets have moved passage odds into the roughly two-thirds range, but multiple stakeholders still call the next couple of weeks critical.

Conclusion

The CLARITY Act is closer than at any point in the past few years to giving the United States a comprehensive crypto rulebook, anchored on clear SEC and CFTC roles and strict limits on passive stablecoin yield. Its passage would reduce regulatory fog for exchanges, issuers and DeFi builders, but it also locks in a more bank-like treatment for stablecoins and leaves significant discretion with federal agencies. Over the coming weeks, committee scheduling, lobbying on yield provisions and the broader election calendar will determine whether this push for clarity becomes law or stalls again, keeping U.S. crypto in a prolonged gray zone.