A coordinated push to enact the CLARITY Act is colliding with a rapidly closing legislative window, prompting warnings from industry advocates that a failure to pass the bill this spring could stall crypto developments until the end of the decade.
With the November 2026 midterms looming, the legislative calendar is shrinking, and the complex jurisdictional divide among federal financial committees threatens to derail a bill that has been months in the making.
The CLARITY Act, which advanced through the House of Representatives in July 2025, remains bogged down in the Senate amidst an intense lobbying war between traditional financial institutions and the digital asset sector over the treatment of yield-bearing stablecoins.
Crypto advocates are sounding the alarm that if the Senate Banking Committee does not schedule a markup soon, the legislation will be swallowed by election-year politics.
In an X post, Sen. Cynthia Lummis echoed the growing anxiety across the digital asset space, while warning:
“This is our last chance to pass the Clarity Act until at least 2030. We can’t afford to surrender America’s financial future.”
Notably, market sentiment is already reflecting this pessimism. Bettors on the decentralized prediction platform Polymarket currently price the odds of the CLARITY Act passing this year at 58%, a sharp decline from 82% in February.
On Kalshi, traders are projecting just a 13% probability that the legislation passes before June, 28% before July, and a 62% chance it remains unresolved into 2027.
A shifting industry consensus
Despite the tightening timeline, the crypto industry is presenting an increasingly united front, driven by a series of high-profile reversals.
The most notable shift comes from Coinbase CEO Brian Armstrong, who previously withdrew his support for the Digital Asset Market Clarity Act in January over disputes regarding the bill’s language on tokenized equities, ethics provisions, and stablecoin yields.
That withdrawal was highly influential, contributing to the Senate Banking Committee’s decision to delay a previously scheduled markup vote. Now, Armstrong is publicly urging lawmakers to move forward.
Armstrong’s change in posture immediately followed an op-ed published in the Wall Street Journal by US Treasury Secretary Scott Bessent, who called on Congress to finalize the regulatory framework without further delay.
Taking to X, Armstrong explicitly backed the Treasury chief’s position, stating that months of aggressive negotiation had strengthened the text. He declared:
“It’s time to pass the Clarity Act.”
Coinbase Chief Policy Officer Faryary Shirzad also reinforced this optimism last week, noting the largest US-based crypto trading platform was “ready to do our part to get this done.”
The exchange’s new decision comes as bipartisan negotiators were inching closer to a comprehensive agreement.
The Senate Agriculture Committee already cleared its portion of the legislation in a narrow 12-11 vote in January, under Sen. John Boozman.
However, that language must be reconciled with the securities-focused components under the Senate Banking Committee’s purview, which has yet to act.
The stablecoin yield battleground
The primary bottleneck preventing a full Senate floor vote remains a bitter clash over market liquidity and the foundational mechanics of stablecoins.
Traditional banking lobbies and crypto executives are fundamentally at odds over whether stablecoin issuers should be permitted to pass yields on to their users.
For the traditional banking sector, the concern stems from the mechanics of deposit flight.
The American Bankers Association (ABA) argues that if stablecoins function as high-yield, easily accessible digital assets, they could trigger a massive outflow of retail and commercial deposits from the traditional banking system.
When smaller, regional community banks lose these low-cost deposits, they are forced to replace the funding quickly to maintain their lending operations. This is typically achieved through higher-cost wholesale borrowing, such as tapping Federal Home Loan Bank advances or turning to capital markets.
The ABA maintains that allowing stablecoin rewards under the CLARITY Act would inevitably squeeze net interest margins, forcing banks to raise deposit rates and ultimately reducing credit availability and raising borrowing costs for small businesses.
To neutralize the banking lobby’s narrative, the executive branch has launched an unprecedented, multi-agency pressure campaign.
The centerpiece of this effort is a newly released report from the White House Council of Economic Advisers. The CEA’s macroeconomic analysis directly challenged the ABA’s warnings, concluding that the systemic risks posed by stablecoin yields have been vastly overstated.
According to White House economists, banning interest on stablecoins would increase total US bank lending by only $2.1 billion. Measured against the sprawling $12 trillion American lending market, the CEA framed this as a negligible 0.02% shift, with community banks projected to capture just $500 million of that total.
Conversely, the report warned that prohibiting yields would be a punitive measure against American consumers, resulting in an estimated $800 million in annual welfare loss by depriving them of standard interest on their digital holdings.
The ABA immediately fired back as the Senate returned from its two-week recess. The banking group accused the White House of tracking the crypto industry’s preferred narrative by treating a yield prohibition as an “intervention” and focusing on the wrong macroeconomic questions.
According to ABA:
“By focusing on the effects of a prohibition, the CEA paper risks creating a misleading sense of safety by avoiding the much more consequential scenario: yield-paying payment stablecoins scaling quickly.”
The group stressed that the real threat is not a lack of system-wide reserves, but whether smaller banks possess the balance-sheet flexibility to absorb sudden outflows without abruptly cutting back on credit.
It added:
“The baseline doing the work in the CEA paper — currently an immature stablecoin market of roughly $300 billion — will not resemble a future market reaching $1–$2 trillion. In a larger market, yield is not a minor product feature; it is the mechanism that would accelerate migration out of bank deposits.”
A brutal calendar and electoral risks
While lobbyists spar over balance sheets, the ultimate threat to the CLARITY Act is the 2026 calendar.
Senate Banking Committee Chair Tim Scott has yet to officially schedule a markup date, though proponents like Sen. Bill Hagerty have expressed optimism that the committee could move the bill out before the end of April.
Institutional analysts note that the window for error is practically nonexistent. Justin Slaughter, VP of Paradigm affairs, pointed out that the procedural mechanics of a Senate floor vote generally require two to three weeks.
He stated that the bill must clear the banking committee by mid-May to secure a vote before Memorial Day.
However, if the legislation bleeds into the summer, the political landscape shifts dramatically.
The Senate schedule features extensive non-legislative periods from August 10 to September 11 and again from October 5 through the general election on November 3.
Meanwhile, Senate candidate John E. Deaton has warned that failing to act now could prove fatal for crypto innovation. According to him, if the bill stalls and the November elections result in a shift in Senate control, the regulatory environment could tilt sharply.
Deaton cautioned that a change in leadership on the Senate Banking Committee, which could potentially install crypto-skeptic Sen. Elizabeth Warren as chair, would almost certainly pivot the committee’s focus toward strict enforcement rather than structural market innovation.
With Washington’s attention inevitably pivoting toward campaign season after July 4, the next few weeks will dictate whether the digital asset sector secures a long-awaited regulatory framework, or if the US market is left waiting in legislative limbo for another four years.
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