May Deadline: If Clarity Act Delays Further, Crypto Legislation May Wait Until Next Congress

The U.S. Senate Banking Committee originally planned to deliberate and vote on the 加密 market structure bill, the Clarity Act, by the end of April, but intense lobbying initiated by banking trade groups is pushing this timeline into May. Committee Chairman Tim Scott told Fox Business on April 14th that deliberations might not be completed in April, citing three unresolved issues: stablecoin yield provisions, DeFi-related clauses, and securing support from all Republican senators on the committee.

Procedurally, if the Banking Committee planned to vote during the week of April 27th, it needed to issue a notice of consideration no later than April 25th. However, the committee’s attention on April 22nd will first be occupied by the confirmation hearing for Kevin Warsh, the Federal Reserve Chair nominee put forward by Trump. Senator Bernie Moreno explicitly warned that if the bill does not reach a full Senate vote before May, the midterm election cycle will make major legislation politically untouchable, and digital asset regulation might have to wait until the next Congress.

A Two-and-a-Half-Month Negotiated Compromise, Banks Flip the Script at the Last Minute

The core controversy of the Clarity Act centers on whether stablecoin issuers can pay yields to holders. After over two months of negotiations, Republican Senator Thom Tillis and Democrat Angela Alsobrooks reached a principled compromise in late March, prohibiting passive holding yields—meaning interest earned simply for holding a stablecoin—but allowing rewards based on on-chain activities like payments and transfers. The crypto industry largely accepted this proposal, or at least did not publicly oppose it.

According to Crypto In America, the compromise text was not publicly released but was shown in limited circles to representatives from the banking and crypto industries. The banking side’s stance was ambiguous after the initial meeting, but opposition from the banking sector intensified sharply after the White House Council of Economic Advisers (CEA) released a report on April 8th downplaying the impact of stablecoin yields on the banking system.

The North Carolina Bankers Association began organizing member banks to collectively call Tillis’s office to exert pressure. Punchbowl News reported that banking trade groups had expanded their lobbying efforts to other Banking Committee members beyond Tillis and Alsobrooks. Tillis himself appeared receptive to the banking sector’s demands, proposing a “crypto palooza” plan last week to invite banking and crypto industry experts to meet with senators face-to-face to resolve differences, but this would further delay the process. On April 17th, Tillis announced he would not release the compromise text for now, citing uncertainty around the timing of deliberations.

Patrick Witt, Executive Director of the White House Crypto Council, publicly criticized the banking industry’s continued lobbying on X, stating it was “hard to interpret further lobbying as anything other than greed or ignorance.” An informed source told Eleanor Terrett, “Small banks across the country are not being well served by the trade associations in Washington. The banking lobby can accept this outcome, limit deposit outflows, or they can blow it themselves on the verge of victory and then face the status quo.”

White House Report vs. Banking Industry: A 0.02% Disagreement

The core data fueling the debate comes from a 21-page analysis report released by the White House CEA on April 8th.

The CEA concluded that a complete ban on stablecoin yields would only increase total bank lending by approximately $2.1 billion, equivalent to 0.02% of total outstanding loans. For community banks, considered most vulnerable to deposit flight, the additional lending capacity would be about $500 million, a 0.026% increase. Meanwhile, the ban would impose a net cost of roughly $800 million on consumers. The report’s subtext suggested the banking industry’s claim that stablecoin yields threaten the deposit base is not supported by the data.

According to Crypto in America reporter Eleanor Terrett, the American Bankers Association (ABA) publicly criticized the recent stablecoin report from the White House CEA, arguing the analysis was mis指导d and overlooked more central policy risks. The ABA warned that allowing stablecoins to pay yields could lead to large-scale deposit flight from community banks, increased funding costs, and consequently tighter local credit supply.

The ABA pointed out that the CEA report focused on the impact of banning yields, creating a false sense of security and avoiding the more disruptive scenario of the rapid, scaled expansion of interest-bearing payment stablecoins. The ABA had previously warned that stablecoin yields could lead to up to $6.6 trillion in deposit outflows.

Two More Hurdles Beyond Stablecoin Yields

Stablecoin yields are the most prominent point of contention in the Clarity Act, but not the only obstacle. The other two issues listed by Tim Scott are equally thorny.

First, the DeFi clauses remain in a tug-of-war. Democratic senators, citing frequent recent DeFi security incidents—including multiple large-scale attacks in April alone, such as the ~$290 million theft from Kelp DAO and the $285 million theft from Drift Protocol—are demanding stricter anti-money laundering and sanctions compliance clauses be added to the bill, particularly targeting more anonymous decentralized protocols. Tim Scott believes the disagreements over DeFi clauses could be resolved within two weeks, but this assessment is predicated on the stablecoin yield issue not causing further delays.

Second are ethics clauses. Democrats are pushing to include provisions in the bill that restrict senior government officials from deriving personal benefits from crypto assets during their tenure. This demand is particularly sensitive against the backdrop of ongoing controversy surrounding the Trump family-linked World Liberty Financial (WLFI) project. Republicans, on the other hand, are concerned that some of the proposed restrictions are overly broad and could be used as a political tool.

May is the Hard Deadline

Before being signed into law, the Clarity Act still needs to clear five hurdles: deliberation and vote in the Banking Committee, a 60-vote vote in the full Senate, reconciliation with the version from the Agriculture Committee, reconciliation with the version passed by the House in July 2025, and the President’s signature. Each step takes time, and the political pressure of the midterm elections is shrinking this window.

As the first comprehensive crypto market structure legislation in the U.S., the core task of the Clarity Act is to clarify the jurisdictional boundaries between the SEC and CFTC over digital assets, providing a clear legal framework for token classification, exchange registration, custodian compliance, and other issues. The House version passed in July 2025. The speed of the Senate version’s progress in the Banking Committee will directly determine whether this law can be enacted in the current Congress. Ripple CEO Brad Garlinghouse previously predicted the bill would complete deliberations in April but later revised his expectation to the end of May.

Following this week’s Warsh hearing, whether the Banking Committee issues a notice of consideration by Friday will determine if the Clarity Act enters deliberations by the end of April or slips into the second week of May after the Senate returns from recess. If delays continue, there will be very little time left for the Senate to complete the five legislative steps before the election cycle.

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