The US Senate's most ambitious crypto market structure bill is stuck in a four-way deadlock between banking lobbyists, crypto firms, Democrats and Republicans. If it doesn't clear the Banking Committee this month, it may not get another chance before the midterms.
The US Senate returned from Easter recess on 13 April with the Digital Asset Market Clarity Act still deadlocked in the Banking Committee, blocked by a four-way standoff between banking lobbyists, crypto firms, Democrats and Republicans that has persisted since January and shows no sign of breaking.
The markup window — the second half of April — is effectively the bill's last chance. Multiple Congressional observers have warned that failure to advance the legislation from committee before May would push it off the legislative calendar entirely, perhaps not until after the November 2026 midterm elections. That would leave the United States without a comprehensive crypto market structure law at precisely the moment the SEC and CFTC are building one through interpretive guidance instead.
The deadlock has four distinct sides, each capable of killing the bill on its own. Senate and industry backers, led by Banking Committee Chairman Tim Scott, want a federal framework that gives crypto firms a workable path into US regulation, with clearer jurisdictional lines between the SEC and CFTC. Bank-aligned critics, chief among them the American Bankers Association, want to seal off stablecoin yield and prevent deposit-like products from migrating outside the regulated banking system. Democratic senators are demanding ethics provisions that would bar government officials and their families from personally profiting from crypto holdings — language aimed squarely at the Trump family's various token ventures. And structural critics, including former CFTC Chair Timothy Massad and the advocacy group Better Markets, argue the bill would carve digital assets out of core investor protections.
The stablecoin yield dispute has been the bill's main choke point for three months. The Tillis-Alsobrooks compromise, hammered out on 20 March between Republican Senator Thom Tillis and Democrat Angela Alsobrooks, bans passive yield on stablecoin balances but permits activity-based rewards tied to payments and platform use. The banking industry accepted that language. Crypto firms did not. The American Bankers Association fired back at the White House earlier this month after a Council of Economic Advisers report argued the yield ban would increase bank lending by just $2.1 billion, roughly 0.02 per cent of total loans outstanding, calling the analysis misleading.
The draft text that currently survives committee review is the bank-friendly version. It prohibits offering yield "directly or indirectly" on stablecoin balances and covers exchanges, brokers and affiliated entities, closing the structural workarounds that platforms like Coinbase had relied on. Circle's stock fell 20 per cent following the draft's release, erasing $5.6 billion in market value. Markets, at least, priced in a banking industry win.
The significance of the yield fight extends well beyond the CLARITY Act itself. The GENIUS Act, signed into law last year, established the basic regulatory perimeter for stablecoins but deliberately left the yield question open. The ambiguity has since generated a lobbying battle that now threatens to consume the broader market structure legislation. Stablecoin revenue represented approximately 20 per cent of Coinbase's 2025 revenue, largely through its partnership with Circle on USDC distribution. A comprehensive yield ban would hit that line item directly.
Brian Armstrong, Coinbase's chief executive, has remained publicly silent on the new draft language. That silence is itself a signal; when Armstrong perceives a regulatory fight he can win, he tends to say so loudly. The commercial stakes are too large for the omission to be accidental.
The Democratic ethics demands add another layer of complexity. Several senators have tied their support for the bill to provisions barring officials and their families from holding or profiting from crypto assets while in office. The provision targets President Trump's $TRUMP memecoin and related ventures, which have drawn a formal Senate inquiry from Senators Warren, Schiff and Blumenthal. Republican leadership has shown no appetite for including such language, creating a bipartisan veto that neither side can resolve without losing members from its own coalition.
Meanwhile, the regulators have not waited for Congress. The SEC and CFTC's March memorandum of understanding, followed by a joint interpretive release providing a coherent token taxonomy, has given the market much of the classification clarity the CLARITY Act was supposed to deliver. The agencies' decision to use interpretive rules rather than formal rulemaking means the guidance can take effect immediately, without Congressional approval. If the CLARITY Act dies in committee, the regulatory framework won't collapse; it will develop through executive action rather than legislation, carrying all the fragility and reversibility that implies.
The April window is narrow. The Senate Banking Committee has a packed calendar, and the midterm campaign season will begin consuming political attention by June. If Tim Scott cannot broker a compromise that satisfies enough of the four factions to clear committee, the most comprehensive crypto market structure bill in US history will have been killed not by opposition but by the inability of its supporters to agree on what it should contain.
