US Crypto Bill Stalls Amid Bank Pushback
The U.S. CLARITY Act, a major crypto regulation bill, has stalled after banking lobbies blocked a deal on stablecoin yield rules. Ripple's CEO is now publicly urging banks to support the framework, which could clarify rules for the SEC and CFTC and potentially open the door for XRP or SOL ETFs.
The Digital Asset Market Clarity Act, or CLARITY Act, was introduced on May 29, 2025, by a bipartisan group led by House Financial Services Committee Chairman French Hill and Agriculture Committee Chairman G.T. Thompson. After passing both committees in June, the full House of Representatives approved the bill with a 294-134 vote on July 17, 2025, sending it to the Senate. At its core, the CLARITY Act aims to end the "regulation by enforcement" era by dividing oversight of digital assets between the SEC and the CFTC. It would grant the CFTC exclusive jurisdiction over "digital commodities" while the SEC would regulate assets offered as part of an investment contract. This clear delineation is intended to provide long-awaited legal certainty for the U.S. crypto industry. The primary roadblock in the Senate is Section 404, which addresses stablecoin yields. Banking lobbies, chiefly the American Bankers Association (ABA), are pushing for a complete ban on any interest or rewards paid on stablecoins. They argue that yield-bearing stablecoins could become "deposit substitutes," potentially causing a $6 trillion outflow from community banks and harming their ability to lend. Crypto advocates are pushing back hard against a broad ban. The Blockchain Association argues that rewards are crucial for innovation and competition, and that Congress intentionally allowed for third-party rewards in the preceding GENIUS Act. Circle CEO Jeremy Allaire has called the banks' fears of deposit flight "totally absurd," pointing out that similar concerns about money market funds never materialized. The bill's passage is seen as a critical step for launching new crypto ETFs. A key provision could classify tokens like XRP and Solana as commodities if they are the underlying asset in a U.S.-listed spot ETF by January 1, 2026. This would grant them the same regulatory treatment as Bitcoin and Ethereum, significantly easing the path for new ETF products. Negotiations remain fragile after a White House-brokered meeting on March 1st failed to produce a deal, though talks are ongoing. A planned Senate Banking Committee markup session was postponed indefinitely after Coinbase withdrew its support for the Senate's draft, citing concerns that it would stifle innovation. The bill's fate now hinges on whether a compromise on stablecoin economics can be reached before the legislative window closes.
