Banks Seek to Undermine the CLARITY Act

In a last-minute move, the US banking lobby is advocating for a delay of the CLARITY Act, just days before its planned markup by the Senate Banking Committee on May 14.

This week, the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America released a joint statement opposing the stablecoin yield proposal by Senators Thom Tillis and Angela Alsobrooks. The coalition argued that the proposed language falls short of their policy goals and introduces significant loopholes that could encourage deposit flight from traditional banks.

The banking coalitions claim that Section 404 of the CLARITY Act allows crypto platforms to offer rewards based on account balances and how long users retain assets, which they argue essentially amounts to deposit interest under a different label. “Studies indicate that yield-earning stablecoins could reduce loans to consumers, small businesses, and farms by more than one-fifth,” the coalition stated in their joint announcement, stressing the importance of Congress getting this correct.

Lummis and Tillis respond

In reaction, the bill’s sponsors acted swiftly. Senator Cynthia Lummis, chair of the Senate Banking Subcommittee on Digital Assets, tweeted that the finalized bipartisan text “represents months of dedicated work to reach a yield compromise that is agreeable to all parties.” Senator Tillis, co-author of the agreement, was more direct in his remarks, warning that some areas of traditional finance might resist any version of the CLARITY Act and are using the stablecoin yield debate as a tactic to indefinitely delay the legislation.

Tillis’s final remarks in his public defense were clear: “Some in the banking sector may oppose both of these outcomes, and we respectfully disagree.” The united public defense from Lummis and Tillis indicates that the bipartisan coalition backing the compromise is solid as the markup date approaches.

The CLARITY Act passed the House with a vote of 294 to 134 in July 2025 and received approval from the Senate Agriculture Committee in January 2026, but it has faced repeated delays in the Senate Banking Committee due to ongoing disputes over stablecoin yield. As reported by crypto.news, Senators like Cynthia Lummis and Bernie Moreno have warned that failing to make headway before the May 21 Memorial Day recess might push the next opportunity for the bill’s advancement to 2030.

Upcoming developments

Senate Banking Committee Chairman Tim Scott confirmed the markup hearing for May 14 at 10:30 am. The White House has expressed hopes for passage by July 4, with crypto adviser Patrick Witt noting that the stablecoin yield deal is nearing finalization. Ripple CEO Brad Garlinghouse emphasized at Consensus Miami 2026 that the previous week signified a “substantial positive shift” in Senate momentum.

Galaxy Digital’s head of research, Alex Thorn, has estimated the likelihood of the bill passing at around 50-50, while prediction markets currently estimate that figure at above 60%. A HarrisX poll released this week indicated that 52% of registered US voters support the CLARITY Act, with 47% suggesting they would consider backing a candidate outside their party if that candidate supported the legislation while their preferred candidate did not.

For the bill to reach the president’s desk, it must successfully navigate the Senate Banking Committee markup, meet the 60-vote threshold, reconcile with the Senate Agriculture Committee’s version, and align with the House-passed text. Each of these stages presents its own potential hurdles.