A high-stakes fight over the future of stablecoins has stalled a major US crypto bill in Congress, exposing deep divisions between crypto firms and the banking lobby — and raising new questions about how digital dollars should be regulated.
The Digital Asset Market Clarity Act of 2025, widely called the CLARITY Act, was designed to create clear rules for how crypto assets are classified and supervised in the United States. But the legislation hit a roadblock after Coinbase and other industry players publicly rejected earlier drafts — primarily because those versions would bar stablecoins that pay interest, a product many crypto firms want to offer. Banks, meanwhile, have pushed hard to keep yield-bearing stablecoins off the market.
Senator Thom Tillis (R‑N.C.) has been quietly reworking the bill to try to bridge the gap between the parties, but his revised draft has not been released and reportedly faces fresh pushback from both sides. The impasse underscores how central the single question of whether stablecoins should be allowed to pay yield has become to broader crypto regulation.
For now, at least, some analysts say the threat stablecoins pose to traditional banks is limited. Abhi Srivastava, associate vice president in Moody’s Investors Service Digital Economy Group, argues that U.S. payment rails are already fast, low‑cost and trusted, reducing the appeal of stablecoins for everyday payments. He also pointed to the current legal prohibition on stablecoins paying yield as a key reason they’re unlikely to draw deposits away from banks at meaningful scale in the near term.
That cautionary note hasn’t stopped stablecoin adoption from growing. The market cap for stablecoins topped $300 billion by the end of last year, driven by use in payments, cross‑border transfers, and on‑chain finance. Tokenized real‑world assets — traditional assets represented on blockchains — are also expanding alongside stablecoins, creating a potential future pressure point for banks.
Srivastava acknowledged the landscape could change: if stablecoins and tokenized assets materially increase in size and use, banks could eventually face deposit outflows and diminished lending capacity. That possibility helps explain why banking interests are lobbying intensely to keep yield bans in place — they’re preparing for a scenario that hasn’t arrived yet.
Crypto industry insiders warn that failure to pass a compromise CLARITY Act could leave the sector vulnerable to more aggressive regulation from other authorities down the line, adding urgency to a negotiation that so far has produced little progress. Both sides publicly say they want a deal; finding common ground on yield-bearing stablecoins remains the stumbling block.
(Featured image: Pexels; chart: TradingView)
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