CLARITY Act Stablecoin Yield Rift Tests Senate Markup Timeline

The legislative path for the CLARITY Act has hit a structural roadblock as the banking industry fractures over the bill’s treatment of stablecoin yields. While the bill aims to establish a federal framework for digital assets, the latest draft language has failed to satisfy the divergent interests of large consumer-oriented banks and their smaller, non-retail counterparts. This internal industry friction threatens to complicate the Senate Banking Committee’s efforts to consolidate support before a critical markup session scheduled for next week.

At the core of the dispute is the mechanism by which stablecoins generate yield. Large consumer banks argue that the current language is drafted too narrowly, leaving significant loopholes that crypto-native businesses could exploit to continue offering yield-bearing products under the guise of compliance. These institutions maintain that the proposed compromise fails to eliminate yield entirely, serving instead as a structural pivot rather than a definitive regulatory ban. This perspective has drawn sharp rebukes from proponents of the bill, including Patrick Witt, who questioned the banking sector’s interpretation of a compromise.

Conversely, institutions lacking retail exposure have signaled acceptance of the revised text, viewing it as a functional path toward market clarity. The Independent Community Bankers of America (ICBA) remains a vocal critic, yet a subset of smaller lenders has expressed support, creating a fragmented lobbying front that complicates the efforts of Senator Thom Tillis and Senator Angela Alsobrooks. The two senators were tasked with settling the yield debate, but the resulting language has left the banking lobby in a state of active negotiation rather than consensus.

Senate Banking Committee Chairman Tim Scott is currently navigating this divide, attempting to secure full Republican backing for the bill before initiating formal negotiations with Democratic counterparts. The urgency is palpable, as Senator Bernie Moreno noted that legislative work is accelerating to assemble a tidy package for a Senate markup. The stated objective is to push the legislation to the desk of President Donald Trump before the end of June, with the goal of signing the bill into law by July 4.

Beyond the technical language of the bill, the political calendar imposes a hard constraint on its passage. Alex Thorn has highlighted the importance of the upcoming Senate elections, noting that the control of the chamber is a primary variable for the bill’s long-term viability. Should the Democratic party regain control of the Senate, the leadership of the Banking Committee could shift to figures such as Sherrod Brown or Elizabeth Warren. Given their historically skeptical stance on crypto-asset integration, such a leadership change would likely result in the bill being deprioritized or removed from the committee’s agenda entirely.

Market sentiment currently reflects a degree of optimism despite these legislative hurdles. Data from Polymarket suggests a greater than 60% probability that the CLARITY Act will pass in 2026, indicating that traders are pricing in a high likelihood of eventual regulatory resolution. However, the immediate risk remains the potential for the markup to be delayed if Chairman Scott cannot reconcile the competing demands of the banking lobby. For those tracking the broader crypto market analysis, the outcome of the upcoming markup will serve as a bellwether for how the U.S. intends to balance traditional financial stability with the growth of decentralized finance.

Institutional exposure to these regulatory shifts is significant, particularly for entities like Coinbase Global Inc. (COIN stock page). With an Alpha Score of 37/100, the stock currently reflects a mixed sentiment, as the market weighs the potential for increased regulatory clarity against the ongoing costs of compliance and the threat of restricted product offerings. The firm’s ability to navigate the evolving yield landscape remains a critical factor for long-term valuation, especially as the legislative process moves into its final, most volatile phase.

As the Senate prepares for the May markup, the primary indicator of success will be the ability of the bill’s sponsors to maintain the current momentum without conceding to the demands for a broader ban on stablecoin yields. If the current language holds, the bill may proceed to a floor vote; if the banking lobby forces a redraft, the timeline for a July 4 signing will likely collapse. Traders should monitor the committee’s official statements following the markup for any changes to the yield provisions, as these will dictate the operational environment for stablecoin issuers and the platforms that support them.