Banks opposing stablecoin rewards stall CLARITY Act

TLDR

The CLARITY Act is stuck in the US Senate because big banks are fighting over whether stablecoins can pay yield-like rewards to users.

1. The CLARITY Act passed the House but stalled in the Senate after banks rejected a White House compromise on stablecoin rewards, prompting postponed committee votes.
2. Banks warn that yield-bearing stablecoins could trigger deposit flight and want bank-level rules, while crypto firms push for 3 to 5 percent rewards to compete with near-zero bank interest.
3. For crypto users, the final rules will decide whether regulated US stablecoins can offer meaningful yields and could act as a major market catalyst if a compromise is reached.

Deep Dive

1. How Bank Pushback Stalled The CLARITY Act

The CLARITY Act is a broad US crypto market structure bill that has already cleared the House but is now stalled in the Senate. The main roadblock is not Bitcoin or DeFi generally, but the treatment of stablecoin rewards.

Reports say the bill stalled after banks rejected a White House compromise on stablecoin rewards, leading the Senate Banking Committee to postpone markup. A February or March target for a deal has already slipped, and negotiations between banks, crypto firms and the administration are ongoing with no agreement.

The earlier GENIUS Act set rules for issuers and bans them from directly paying interest, but it left open whether exchanges and other intermediaries can pay yield on stablecoin balances. CLARITY is where that loophole is supposed to be resolved, which is why the dispute is intense.

2. Why Banks Oppose Stablecoin Rewards

Bank lobby groups argue that letting platforms pay yield on stablecoin balances effectively turns them into deposit-like products that should be regulated as banks. JPMorgans CEO Jamie Dimon has said that holding balances and paying interest is a banking function that requires capital standards and FDIC-style protections.

A White House digital asset adviser pushed back, noting that the GENIUS Act already forbids issuers from rehypothecating the dollars backing stablecoins, and that the current fight is specifically over reward programs for holders, not hidden lending of reserves underlined in this rebuttal of Dimons view. Banks still warn that yield-bearing stablecoins could drain hundreds of billions of dollars from traditional deposits into higher?yield digital wallets.

On the other side, crypto firms argue that rewards are essential for adoption. Commentators close to the talks point out that big banks pay roughly 0.010.05 percent APY on savings, while stablecoin platforms aim to offer 4 percent or more, and that the CLARITY Act has stalled in part because banks want those yields curbed or banned as highlighted in this critique of bank lobbying.

3. Why It Matters For Crypto Users And Markets

For users, the fight determines whether regulated US dollar stablecoins will look like pure payment tokens with no meaningful yield, or like high?yield cash alternatives inside compliant platforms. A strict bank victory would likely mean very limited or activity-only rewards; a crypto win could preserve higher yields but might come with tougher prudential rules.

Market strategists see the CLARITY Act as a potential macro catalyst. JPMorgan analysts and others argue that passage by mid?2026 could open the floodgates for institutional adoption and act as a major crypto rally trigger, provided a compromise on stablecoin yields and ethics rules is reached according to this analysis of CLARITYs market impact.

In the meantime, stablecoin usage is already rebounding, and political pressure is rising as President Trump and allies publicly accuse banks of holding the CLARITY Act hostage and demand that market structure get done ASAP in this call for swift passage.

Conclusion

Bank resistance to stablecoin rewards has turned a technical design question into the central bottleneck for US crypto legislation, stalling the CLARITY Act despite prior progress. How that dispute is resolved will determine whether mainstream, regulated stablecoins in the US can offer real yield and how much competition they pose to bank deposits, with knock?on effects for both crypto adoption and broader market sentiment.