The U.S. cryptocurrency sector is experiencing a surge of support for the Digital Asset Market Clarity Act, commonly referred to as the CLARITY Act, as influential stakeholders rally for its imminent passage amidst ongoing legislative delays.
In a notable shift, Coinbase CEO Brian Armstrong took to X this week, expressing his renewed endorsement for the CLARITY Act. Just months prior, he had retracted Coinbase’s support, deeming the proposed legislation insufficient. His latest comments reflect a significant turnaround, with Armstrong stating, “it’s time to pass the CLARITY Act,” indicating confidence in the bill’s current formulation.
Armstrong acknowledged the extensive revisions made over the past several months, stating that bipartisan collaboration among legislators has resulted in a “strong bill”. The urgency for passage has been echoed by Treasury Secretary Scott Bessent, who recently penned an op-ed emphasizing the need for swift action from Congress. “Senate floor time is scarce, and now is the time to act,” Bessent remarked, playing a crucial role in heightening pressure on lawmakers.
The Senate Banking Committee, previously stymied by its ongoing deliberations, is now poised to hold a vote on the CLARITY Act before the end of April. Advocates for the bill are eager to see progress following over a year of stagnation.
The Stalemate Over Stablecoin Rewards
However, a significant challenge persists — the debate surrounding stablecoin rewards. The GENIUS stablecoin law, implemented last summer, prohibits stablecoin issuers from providing direct interest payments to holders. Yet, the legislation does not restrict third-party platforms, such as Coinbase, from offering rewards. This discrepancy has sparked contention, with banking institutions arguing that allowing such yields could siphon customers from traditional banks, particularly smaller community banks.
While crypto advocates argue that restricting rewards would stifle innovation in the sector, their counterparts in the banking industry continue to voice concerns. A recent economic report from the White House suggested that stablecoin rewards would not significantly impact bank lending; however, banks contend that the report failed to assess the specific ramifications for community banks and deposit levels adequately.
A source in the banking sector indicated that discussions are currently focused on clarifying the language regarding yield regulations to mitigate lending concerns. Despite the ongoing discord, another anonymous source expressed optimism, stating that the focus is now on garnering bank support for a potential compromise.
What Lies Ahead?
Coinbase’s legal chief Paul Grewal has been vocal about the possibility of a resolution, suggesting that lawmakers were “very close to a deal” last week. If the CLARITY Act successfully navigates the Senate Banking Committee, it will still need to be reconciled with the Senate Agriculture Committee’s iteration. A final vote on the Senate floor necessitates a minimum of 60 votes, emphasizing the importance of bipartisan support.
In a bid to underline the bill’s urgency, Senator Cynthia Lummis, a staunch backer of the legislation, highlighted that this may be the final opportunity to pass the CLARITY Act until at least 2030 due to her decision not to run for re-election following her term’s conclusion in January 2027.
As the legislative clock ticks down, the stakes are high for the cryptocurrency industry. The approval of Coinbase’s application for a national bank trust charter by the Office of the Comptroller of the Currency has set a precedent, as similar approvals were granted to other players in the space, including Paxos, Ripple Labs, BitGo, Circle, and Fidelity Digital Assets.
