The CLARITY Act (Digital Asset Market Clarity Act of 2025, H.R. 3633) has hit a critical impasse in Washington, with two separate conflicts now blocking progress. Closed-door negotiations collapsed this week over partisan demands for crypto ethics guardrails, while a parallel fight between Wall Street banks and crypto exchanges over stablecoin yields has further dimmed the bill’s chances. Polymarket prediction markets currently show only a 49% probability of the Act being signed into law this year, a sharp drop of 18 percentage points in a single week.
Ethics deadlock fuels partisan standoff. Democrats insist on strict ethics provisions tied to former President Trump’s personal crypto interests — reportedly involving $2.3 billion in assets — arguing that such safeguards are essential for public trust. Republicans have refused, calling the demands politically motivated. One negotiator described the closed-door talks as “rocky,” and with the summer recess only weeks away, no compromise is in sight. The White House has signaled it will reject any language explicitly targeting Trump’s digital holdings, deepening the regulatory deadlock.
$20 billion bank vs. crypto exchange feud. The second obstacle is a clause that would allow crypto exchanges to offer yield on stablecoins, a provision bankers warn will siphon deposits from the banking system. JPMorgan Chase CEO Jamie Dimon has become the public face of opposition, recently telling Fox Business that the Act reduces compliance safeguards. Ripple CEO Brad Garlinghouse fired back, accusing Dimon of protecting a payments franchise that generates roughly $20 billion in annual revenue with over $5 billion in profits. Dimon previously dismissed Coinbase CEO Brian Armstrong — a key advocate for the yield clause — as “full of shit.”
The American Bankers Association and the Bank Policy Institute have jointly opposed the yield provision, arguing that yield-bearing stablecoins would act as deposit substitutes, shrinking credit intermediation. A White House Council of Economic Advisers report from April 2026 undercuts that narrative, estimating that banning stablecoin yields would increase bank lending by only $2.1 billion (a 0.02% rise in aggregate credit) while imposing a net welfare cost of $800 million on consumers. The same analysis found that large banks would capture 76% of any incremental lending, with community banks getting just 24% — a distribution that mirrors JPMorgan’s core business interests.
Negotiators plan to reconvene on Thursday, but with both the ethics flashpoint and the bitter banking lobby assault unresolved, the window for passing the CLARITY Act this session is rapidly closing.
