CLARITY Act markup could come next week after stablecoin deal breakthrough

The CLARITY Act is moving toward its next procedural test after Senate negotiators released compromise language on stablecoin rewards last week, raising expectations that the Senate Banking Committee could take up the measure as soon as the week of May 11.

Alex Thorn, head of research at Galaxy Digital, said the release of text from Sens. Thom Tillis and Angela Alsobrooks was a positive signal for a markup to be scheduled soon. He said the compromise had been expected, but that publishing the language made a near-term committee vote more plausible.

The timing has become the central question for the Digital Asset Market Clarity Act, known as the CLARITY Act, after months of negotiations over whether crypto companies can offer customers rewards tied to stablecoins.

As of Monday, the Senate Banking Committee had not posted a May markup of the bill on its public markup page.

However, the difference between an early-May markup and another delay could define whether Congress has enough time to send the measure to President Donald Trump before the election calendar begins to dominate the Senate.

Stablecoin rewards were the blockage

The CLARITY Act had stalled since January, no thanks to disagreements over stablecoin rewards.

Banks have argued that those rewards could function like interest on deposits, pulling money away from regulated lenders and weakening their ability to fund loans.

On the other hand, crypto firms countered that a broad ban would protect banks from competition and restrict incentives for ordinary customers tied to payments, loyalty programs, or platform activity.

Due to these disagreements, the Senate Banking Committee postponed debate on the bill in January, prompting a White House-led concerted effort to ensure its progress.

As a result, a new compromise legislative draft was brokered by Tillis and Alsobrooks to give banks stronger language against yield-like products.

The new Tillis-Alsobrooks language also includes a broad prohibition on rewards offered in a way that is economically or functionally equivalent to interest on a bank deposit. The text would also direct regulators to develop stablecoin rules, including disclosures and a list of permitted reward activities.

In response, Faryar Shirzad, Coinbase’s chief policy officer, pointed out that crypto companies preserved the ability for Americans to earn rewards based on actual use of crypto platforms and networks.

Shirzad said:

Notably, Coinbase was one of the most important opponents of the January draft. So, its current reversal removes a visible industry obstacle, even if it does not guarantee Democratic support for the bill.

Banks to continue fight against stablecoin rewards

Despite the compromise, the traditional banking lobby is expected to actively escalate its defensive maneuvering against the bill.

Thorn had warned that the “banks [could] increase their opposition efforts” to the new development.

The American Bankers Association (ABA), backed by 52 state bankers' associations, launched a preemptive strike last week, submitting a joint comment letter to the Office of the Comptroller of the Currency (OCC).

The coalition is demanding that the agency aggressively strengthen its proposed rules implementing the earlier GENIUS Act to ensure an airtight, enforceable prohibition on stablecoin yield.

In a separate, highly detailed letter to the OCC, the ABA warned that most payment stablecoins are distributed through secondary exchanges and intermediaries rather than directly by the issuers.

The banking lobby argued that allowing any form of yield to flow through these third-party channels would fundamentally defeat Congress's intent, transforming stablecoins into de facto yield-bearing instruments that would erode the core deposit base supporting mainstream lending to households and small businesses.

The banking associations are pushing for targeted regulatory changes to close what they perceive as loopholes.

They are demanding that the OCC expand the definition of “related third party” to capture distribution partners and promoters, ensuring that economically equivalent yield arrangements are blocked regardless of how they are cosmetically labeled or structured.

The ABA explicitly warned that a narrow interpretation of the yield ban would invite widespread circumvention, materially reducing community lending capacity and reshaping global funding markets in ways that pose systemic risks.

Those letters show how the policy battle is shifting. Banks are pressing regulators to close indirect-yield channels under the stablecoin law, while Senate negotiators are trying to prevent the same issue from sinking the broader market-structure package.

That creates a difficult balance for lawmakers. If the compromise is too narrow, banks may argue it leaves a deposit-flight loophole intact. If it is too broad, crypto companies may warn that ordinary customer incentives and network-based rewards are being treated as bank interest.

May markup becomes the calendar test

Against this backdrop, the bill’s supporters are treating May as the practical deadline for restarting the Senate Banking Committee process, making the week of May 11 the first real test of whether the legislation still has a workable path this year.

A markup during that week would allow senators to debate and amend the bill before voting on whether to send it to the full Senate.

That step is not the final passage, but it is essential. Without it, the bill remains trapped at the committee level, where disagreements over stablecoin rewards, decentralized finance, software developers, and regulatory authority have already consumed months of negotiations.

This is because the remaining path to enactment would require several sequential steps: a Senate Banking Committee vote, full Senate passage, reconciliation with the Senate Agriculture Committee, alignment with the House-passed CLARITY Act, and presidential approval.

That sequence makes timing critical. A markup during the week of May 11 would leave lawmakers with a narrow but plausible path for floor consideration in late May or June. A strong bipartisan committee vote would also make it easier for Senate leaders to justify floor time and would signal that the stablecoin-yield fight no longer defines the bill.

However, a slip beyond mid-May would create a different political reality. Each week of delay pushes the debate closer to the August recess and the midterm campaign season, when appropriations, nominations, defense priorities, and other election-year demands will compete for floor time.

Banks would also have more room to harden opposition, crypto skeptics could reopen other provisions, and the House-Senate reconciliation process would become harder to finish before the summer break.

Sen. Cynthia Lummis, a pro-crypto advocate, has warned that failure to pass the bill this year could push comprehensive market-structure legislation into 2030. The warning reflects the risk facing the industry if control of Congress changes after the midterm elections or if committee leadership shifts in 2027.

For markets, the immediate signal is not that passage is assured. It is that the next measurable test has moved into view.

So, the release of the compromise text has turned the week of May 11 into the first marker for whether Washington’s crypto overhaul still has enough time, and enough political support, to move this year.

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