The U.S. crypto regulatory landscape faces a significant hurdle as negotiations over the CLARITY Act have stalled due to a fundamental disagreement between banks and crypto firms over whether stablecoins should be allowed to offer rewards to users. The bill, which passed the House of Representatives in July 2025 with bipartisan support, aims to establish a clear regulatory framework for digital assets.
The core dispute centers on stablecoin rewards. Crypto companies are advocating for the ability to offer 3-4% incentives to attract users and compete in the digital payments market. Banks, however, are staunchly opposed, warning that such rewards could trigger massive outflows from traditional bank deposits into crypto wallets. Some financial institutions estimate stablecoins could pull $500 billion from bank deposits in the coming years, potentially reducing funds available for lending and weakening parts of the banking system.
In an attempt to broker a compromise, the White House proposed a middle-ground solution that would allow rewards only for limited uses like peer-to-peer payments, while banning incentives for stablecoins held idle in wallets. While most crypto firms accepted this proposal, banks rejected it and pushed for stricter limits. Following this impasse, former President Donald Trump criticized banks on Truth Social, stating he would not allow them to undermine his crypto agenda.
U.S. lawmaker French Hill, a proponent of the legislation, emphasized that the CLARITY Act is designed to bring clear rules to the crypto industry. He argued that stablecoins should function primarily as payment tokens, not yield products. Hill noted the bipartisan support shown last year when both the CLARITY Act and the GENIUS Act passed the House with dozens of Democratic votes.
With negotiations at a standstill, attention now turns to a critical roundtable discussion hosted by the U.S. Securities and Exchange Commission (SEC) on April 16, 2026. The event will review how federal securities laws should apply to digital assets and examine how new rules could balance innovation with investor protection. However, given the entrenched positions, many observers now believe the CLARITY Act may not become law until 2026.
