The Senate Banking Committee’s May 14 markup of the CLARITY Act could ban yield on non-bank stablecoins, hitting payments and tokenization revenue for JPMorgan, Visa, and 22 others.
The Senate Banking Committee will mark up the CLARITY Act on May 14, the first formal committee action on legislation that could strip yield-bearing stablecoins of their core utility. The markup, previously flagged by AlphaScala in a note on stablecoin reward risk, arrives as 24 major financial institutions have embedded crypto services across trading, custody, funds, payments, tokenization, and exchange-traded products. Asset management firm Bitwise shared the data on social media platform X on May 8, mapping the expansion across banks, asset managers, exchanges, and payment networks.
The CLARITY Act proposes a regulatory framework that would prohibit interest or yield on stablecoins issued by non-bank entities. The committee markup gives senators their first chance to amend the bill, setting the scope for a potential floor vote. If the yield prohibition survives committee intact, algorithmic and fintech-issued stablecoins would need to restructure as bank-issued products or lose the interest feature that makes them competitive with money market funds.
For the 24 institutions in Bitwise’s chart, the immediate impact falls on payment networks and tokenized fund platforms. Visa has explored stablecoin settlement infrastructure. Mastercard developed its Multi-Token Network for blockchain-based financial services. JPMorgan Chase operates Kinexys, a blockchain-based settlement system, and appears in all six categories that Bitwise tracked. A yield ban would not shut down these payment rails. It would remove the incentive layer that draws deposits to stablecoins, compressing the fee pools that banks and card networks expect to capture.
The Bitwise chart organizes the 24 firms into trading, custody, private funds, exchange-traded products (ETPs), payments, and tokenization. Crypto ETPs represent the broadest point of entry. Bank of America now provides Merrill wealth management clients access to spot bitcoin ETPs. Vanguard, which previously blocked bitcoin ETFs, now allows brokerage clients to trade crypto ETPs. Blackrock, Fidelity, Franklin Templeton, Morgan Stanley, UBS, and Wells Fargo also appear in the ETP column. A stablecoin yield ban does not directly threaten ETP flows. It would ripple into tokenized fund markets where Blackrock’s BUIDL fund and Franklin Templeton’s on-chain fund administration depend on the same stablecoin liquidity.
Custody and settlement infrastructure runs through BNY Mellon, which has integrated digital asset custody into its core systems, and Deutsche Bank, which expanded custody through a partnership with Taurus. Cboe, Charles Schwab, CME Group, DBS, Deutsche Börse, Goldman Sachs, HSBC, Interactive Brokers, and the London Stock Exchange support trading venues, listed products, or market infrastructure. These firms are more insulated from a yield ban. A regulatory signal that treats non-bank stablecoins as second-class instruments would slow the institutional adoption that custody and trading revenues depend on.
JPMorgan Chase, with an Alpha Score of 50 (Mixed), carries the broadest exposure among the 24 firms. Bank of America and Goldman Sachs each hold an Alpha Score of 56 (Moderate), with clearer crypto footprints concentrated in ETP access and private funds respectively.
Bitwise CIO Matt Hougan said on X on May 7:
“Eventually, every fund will be tokenized.”
That thesis runs through the tokenization column of the Bitwise chart. Blackrock’s BUIDL fund moves institutional liquidity on-chain. Franklin Templeton records fund activity on public blockchains. Bitwise itself announced its planned tokenized USCC fund. Citi Token Services, JPMorgan’s Kinexys, HSBC Orion, UBS uMINT, and Société Générale FORGE all test blockchain-based settlement and asset issuance.
A yield prohibition on non-bank stablecoins would fracture that ecosystem. Funds that use yield-bearing stablecoins as a cash leg would need to switch to bank-issued alternatives or accept lower returns on idle capital. That raises the cost of on-chain fund administration and narrows the spread that makes tokenization profitable. The same logic applies to the payments column, where Citi, BNY Mellon, DBS, Deutsche Bank, HSBC, JPMorgan Chase, Mastercard, Société Générale, UBS, and Visa are all marked. Visa’s settlement work and Mastercard’s Multi-Token Network assume a deep pool of liquid, yield-bearing stablecoins that can move value across borders without correspondent banking friction. A yield ban would shrink that pool, forcing payment networks to rely on bank-issued stablecoins that may lack the same programmability.
Three developments would reduce the risk for the 24 firms. First, an amendment during the May 14 markup that carves out yield for stablecoins used in institutional settlement or tokenized fund administration would protect the revenue model without fully repealing the yield ban. Second, a delay in the committee vote would push the timeline past the summer recess, giving banks time to adjust product roadmaps. Third, a coordinated comment letter from the largest exposed firms–JPMorgan Chase, Blackrock, and Visa among them–could signal to the committee that the yield ban would disrupt existing infrastructure rather than prevent future risk.
A fourth, less visible factor is the Federal Reserve’s posture. If the Fed treats bank-issued stablecoins as deposits eligible for interest, the yield ban on non-bank issuers becomes less damaging because the largest payment networks can migrate to bank-issued instruments. The Bitwise chart already shows JPMorgan Chase, HSBC, and DBS operating across payments and tokenization; a Fed framework that grandfathers those activities would contain the damage.
The risk amplifies if the markup produces a clean bill with the yield prohibition intact and bipartisan support. A 12-11 or 13-10 vote along party lines would signal that the provision has enough momentum to survive a floor vote, forcing the 24 firms to price in a structural change to the stablecoin market. The institutions would then face a choice: accelerate their own bank-issued stablecoin programs or retreat from the tokenized fund and payments columns that Bitwise highlighted.
A second amplifier is timing. The markup falls in the same window as the SEC’s ongoing review of spot ether ETP applications and the CFTC’s proposed rule on derivatives clearing for digital assets. A coordinated regulatory squeeze–stablecoin yield ban, delayed ether ETP approvals, and higher clearing costs–would compress the revenue pools that the 24 firms have spent two years building. The Bitwise chart captures a snapshot of expansion; a multi-agency tightening would turn that snapshot into a peak.
A third amplifier is customer withdrawal risk. If the yield ban triggers a run on non-bank stablecoins, the payment networks and tokenized funds that rely on those stablecoins as a settlement layer would face a liquidity crunch. The 24 firms are not directly liable for stablecoin redemptions. The operational disruption would hit trading volumes, custody fees, and fund administration revenue. The interconnectedness that Bitwise’s chart illustrates–JPMorgan Chase in all six categories, Visa and Mastercard in payments, Blackrock in ETPs and tokenization–means a liquidity event in one column would transmit to the others.
The May 14 markup is not a final vote. It is the first formal step in a legislative process that could stretch into 2026. For the 24 institutions that have already committed capital to crypto infrastructure, the markup will set the boundaries of what is politically possible. A bill that preserves yield for institutional settlement would validate the expansion Bitwise documented. A bill that bans yield outright would force a restructuring that the chart does not yet price in.
Drafted by the AlphaScala research model and grounded in primary market data – live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.