Key Points
- Senate Banking Committee must advance the CLARITY Act by April’s end or 2026 passage becomes unlikely
- Prediction markets show declining confidence: Polymarket at 56% (down 9 points), Kalshi at just 30% before June
- Central debate revolves around whether stablecoin providers should be permitted to distribute yield to holders
- Coinbase withdrew endorsement in January, stating a flawed bill is worse than no legislation
- Gnosis co-founder cautions the legislation might centralize crypto power among traditional institutions
The United States’ landmark crypto market structure legislation, the CLARITY Act, is approaching a critical juncture. Galaxy Research’s head of research, Alex Thorn, cautioned that without Senate floor consideration by early May, the bill’s prospects for 2026 enactment become virtually nonexistent. The Senate Banking Committee must therefore advance the measure before April concludes.
Senate Majority Leader John Thune has publicly acknowledged the April timeline appears unrealistic. Congressional focus remains fixed on the SAVE America Act, relegating the CLARITY Act to secondary status on the legislative calendar.
According to Thorn, each passing day diminishes the available time for comprehensive floor discussion and voting. Should April conclude without committee advancement, he characterized the likelihood of 2026 passage as “extremely low.”
Betting markets mirror this growing skepticism. Polymarket data indicates the probability of 2026 enactment has fallen 9 percentage points to 56%. Kalshi presents an even more pessimistic outlook, estimating 30% odds before June and merely 7% before May.
The Stablecoin Yield Controversy Takes Center Stage
The primary flashpoint remains stablecoin yield distribution. Lawmakers are divided on whether issuers of stablecoins should have the authority to pass interest earnings to token holders.
Representative French Hill has insisted that prohibiting stablecoin yield represents a non-negotiable requirement for Senate advancement. Traditional banking institutions contend that yield-generating stablecoins would siphon deposits from their regulated frameworks.
Digital asset firms counter that reward mechanisms enhance stablecoins’ utility for payment applications. Coinbase revoked its support in January. Chief Executive Brian Armstrong criticized the proposal for undermining decentralized finance, prohibiting stablecoin yields, and restricting tokenized real-world assets. His position: “We’d rather have no bill than a bad bill.”
Senator Angela Alsobrooks suggested compromise from all parties may prove necessary. Paul Grewal, White House crypto adviser and Coinbase Chief Legal Officer, criticized banking sector resistance as obstructionist.
DeFi Oversight and Jurisdictional Questions Remain Open
Thorn indicated the stablecoin yield question may not represent the final major obstacle. Outstanding issues include decentralized finance regulatory frameworks, developer liability protections, and the division of enforcement authority between the Securities and Exchange Commission and Commodity Futures Trading Commission.
Attorney Jake Chervinsky noted that banking institutions harbor additional concerns about stablecoin capital migrating into DeFi protocols, beyond just yield distribution mechanisms.
Dr. Friederike Ernst, co-founder of Gnosis, warned the bill’s present framework risks funneling crypto activity exclusively through licensed gatekeepers. This concentration could consolidate control of cryptocurrency infrastructure among a handful of dominant traditional institutions.
Ernst acknowledged certain positive elements, including safeguards for peer-to-peer transactions and self-custody rights, along with clearer delineation of SEC and CFTC jurisdictions.
Senator Bernie Moreno expressed continued optimism for April passage and presidential signature. Thorn, however, assessed that schedule as increasingly implausible.
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