Why Banks and Crypto Companies Can’t Find Common Ground Under the CLARITY Act in the U.S.

The CLARITY Act is currently under discussion in the United States and is intended to establish clearer rules for regulating the crypto market. However, instead of bringing stakeholders together, it has already become a source of conflict among key players in the financial system.

In this article, we take a closer look at the roots of this conflict, assess the prospects for the CLARITY Act in the near term, and examine the likelihood of reaching a compromise on crypto regulation in the U.S.

What Is the CLARITY Act?

To understand the nature of the conflict, it is important to first clarify what the CLARITY Act is and what it aims to achieve. The bill was introduced in 2025 as an effort to establish a unified regulatory framework for the U.S. crypto market and reduce the legal uncertainty that has remained one of the industry’s key challenges for several years.

The bill was approved by the House of Representatives and passed to the Senate, where its consideration began in early 2026. However, its progress has effectively stalled for now.

The main goal of the CLARITY Act is to create a legal framework for digital assets and clearly define the responsibilities of regulators. In particular, the bill proposes:

• A clearer division of authority between the SEC and the CFTC over different types of digital assets
• Criteria for classifying assets as either securities or commodities
• Requirements for infrastructure providers, including platforms, custodians, and intermediaries
• Specific provisions for regulating stablecoins, including conditions for their issuance and circulation
• An approach to yield-generating products, especially those that are economically similar to banking instruments

It is the last two areas — stablecoin regulation and restrictions on yield-bearing products — that have become the main source of conflict. For banks, these issues are tied to financial stability and consumer protection, while crypto companies view them as direct constraints on their business models.

At the same time, stablecoin regulation in the U.S. is already being shaped through separate initiatives, including the GENIUS Act. As a result, the CLARITY Act is not the primary tool for regulating stablecoin issuance, but rather complements existing approaches, particularly in terms of market infrastructure and the use of stablecoins in yield-generating products. This is where one of the key conflicts emerges.

The Banks’ Position

From the perspective of the banking sector, tighter requirements for stablecoins and yield-generating products appear to be a logical extension of existing financial regulation. The core argument is that these instruments are economically similar to traditional banking products, yet remain outside a comparable level of oversight.

This view is regularly expressed both in public statements by banking associations and in industry discussions. Representatives of the traditional financial sector point out that yield-bearing stablecoin products effectively replicate the deposit model, without deposit insurance and without capital requirements. In industry debates, such instruments are often described as a form of “shadow banking,” creating risks similar to those in the banking system but without the corresponding safeguards.

Consumer protection is at the center of this argument. Yields offered by crypto products may be perceived as comparable to bank interest rates, but in the event of problems, users have neither guarantees nor clear compensation mechanisms. According to TradFi participants, this creates risks not only for individual users but for the broader financial system, especially under stress scenarios.

Competition is another key concern. Banking sector participants frequently emphasize that crypto companies are able to offer functionally similar products under a more lenient regulatory regime. In this context, the restrictions proposed under the CLARITY Act are seen not as pressure on the industry but as an effort to address regulatory imbalances and level the playing field.

The Crypto Industry’s Position

For crypto companies, the same provisions of the CLARITY Act are seen not as a way to protect the market, but as an attempt to restrict key elements of their business models. In recent years, yield-bearing stablecoin products have become one of the main tools for attracting liquidity and competing with traditional financial services.

This is why proposals to limit such products have triggered a strong reaction from the industry. Coinbase CEO Brian Armstrong stated that the current form of the bill is “materially worse than the current status quo” and could do more harm than good. According to him, certain provisions of the CLARITY Act effectively constrain the development of segments that have already proven their demand among users.

This view is widely shared within the professional community. Industry blogs and discussions frequently highlight the argument that banks are trying to secure control over yield-generating products by restricting alternative models. In this context, the requirements introduced by the CLARITY Act are seen not as a way to level the playing field, but as an attempt to “rewrite the rules” in favor of traditional market participants.

Another point of concern is the asymmetry of the approach: crypto companies are expected to comply with new requirements, while not being granted access to the same tools and infrastructure available to banks. As a result, the crypto industry views the CLARITY Act not as a compromise but as a regulatory framework that limits market development under the guise of ensuring stability.

Key Points of Disagreement

As a result, disagreements around the CLARITY Act are concentrated in several specific areas:

1. The permissibility of yield on stablecoins. For banks, this is a matter of regulating deposit-like instruments. For crypto companies, it is a core element of their product economics.
2. The allocation of risk and responsibility. The banking sector maintains that any instruments with an investment component should be subject to comparable requirements for consumer protection and risk management. Crypto companies, in turn, argue that these products are not direct equivalents of banking instruments and should not carry the full weight of banking regulation.
3. The role of banking infrastructure. In the context of the CLARITY Act, a broader question emerges: should yield-generating models in the crypto industry operate independently, or should they be integrated into the framework of regulated financial institutions?

At the intersection of these three issues, attempts to establish a unified approach run into fundamentally different assumptions. As a result, provisions that were intended as a compromise are perceived by each side as mutually incompatible.

Why a Compromise Has Not Been Reached

Much of the disagreement around the CLARITY Act stems from an attempt to combine fundamentally different regulatory models within a single bill. Banks and crypto companies start from different approaches to risk, and this is directly reflected in the content of the legislation.

During the drafting and discussion process, these differences were further reinforced by competing industry interests. As a result, the CLARITY Act has become a framework in which individual provisions pull regulation in different directions. The attempt to balance interests did not lead to a compromise, but instead produced rules that each side views as concessions to the other.

Another factor is the uncertainty around how the law would be applied in practice. Even with formally defined rules, there is still the question of how regulators would interpret them. For banks, this increases caution; for crypto companies, it creates the risk that restrictions could end up being stricter in practice than they appear on paper.

Ultimately, the conflict around the CLARITY Act is not driven by a single controversial provision, but by a deeper mismatch in underlying approaches that could not be reconciled within a single legislative framework.

Additional uncertainty is created by the presence of alternative initiatives within the Senate itself. Several parallel efforts in Washington reflect different regulatory philosophies:

1. Lummis–Gillibrand Responsible Financial Innovation Act (RFIA) — a comprehensive bill proposing an alternative regulatory model, with a greater role for the CFTC and the introduction of a distinct category for digital assets. First introduced in 2022 and updated in subsequent years, it remains under discussion as of 2026 and has not been adopted, but continues to shape the regulatory agenda.
2. Lummis–Gillibrand Payment Stablecoin Act — a stablecoin-focused initiative that allows issuance only under strict reserve requirements and regulatory oversight. Introduced in April 2024, it is still under consideration.
3. GENIUS Act — a Senate-initiated stablecoin law adopted in 2025, establishing a federal regulatory framework with a focus on reserve backing and oversight of issuance.

These initiatives highlight the lack of a unified regulatory model within the Senate. Against this backdrop, the CLARITY Act is not a universal solution, but one of several competing approaches, further complicating its path forward.

What’s Next for the CLARITY Act

Given the factors outlined above, the future of the CLARITY Act remains uncertain. The U.S. Senate Banking Committee postponed its consideration of the bill, which had been scheduled for January 15, after representatives of the crypto industry raised objections. While possible new timelines have been discussed, no formal rescheduling with a specific date has been announced.

In the short term, this suggests that the CLARITY Act will likely require revisions. This could involve either softening certain provisions related to yield-bearing products and stablecoins or a more substantial reworking of the most controversial elements. An alternative scenario is further delay, with the bill remaining in limbo amid ongoing debates between market participants and regulators.

For the industry, this means continued uncertainty. Despite progress on individual regulatory initiatives, a unified and coordinated framework has yet to emerge. As a result, key issues are likely to be resolved not through legislation alone, but through ongoing negotiations and targeted compromises.