CLARITY Act Is Not a Crypto Story
By: Paul Schaus
June 10, 2026
A client who is an executive at a large regional bank recently told me that the CLARITY Act worries him. He is right to be worried, though not for the reason the headlines suggest. The Digital Asset Market Clarity Act is filed under "crypto," and most coverage treats it as a turf fight between the digital-asset industry and the SEC over who regulates tokens. For a bank, that framing misses the point. Tucked inside a market-structure bill is a provision that runs straight at the liability side of a bank's balance sheet. For banks, the CLARITY Act is not a crypto story. It is a deposit story.
The House passed the CLARITY Act 294-134 on July 17, 2025, a genuinely bipartisan margin. The Senate then took its time. On May 14, 2026, the Senate Banking Committee advanced its version on a 15-9 bipartisan vote, with two Democrats crossing over. The bill now has to be reconciled with the version the Senate Agriculture Committee approved on a party-line vote — the two committees share jurisdiction because the bill splits oversight of digital assets between the SEC and the CFTC — before anything reaches the floor.
Timing matters here. Industry observers expect a floor vote needs to happen before the August recess, and the administration has signaled it wants the president signing a bill this summer. Several issues are still unsettled: illicit-finance and DeFi concerns raised by law enforcement, a government-ethics provision, and the one that the banking industry is mobilized on — stablecoin yield. In other words, the text is not final, the votes are not locked, and the part that matters most to banks is precisely the part still in play.
Last year's GENIUS Act barred payment-stablecoin issuers from paying interest on their coins. The whole fight in the CLARITY Act is over the workaround. A late compromise from Senators Thom Tillis and Angela Alsobrooks — the deal that finally unlocked the committee vote — bans "passive" yield that simply accrues to a holder for parking a balance, while permitting "activity-based rewards" tied to using a platform. Banks say the carve-out is the loophole. An exchange that pays you for "activity" you would have done anyway is, from the customer's chair, paying you to hold the coin. The label changed; the economics did not.
The numbers behind the alarm are not small. A coalition that rarely agrees on anything — ABA, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, ICBA, and the National Bankers Association — warns that yield-bearing stablecoins become substitutes for insured deposits, and the ABA estimates the market could swell from roughly $300 billion today toward $2 trillion, much of it pulled from bank deposits, cutting lending capacity a fifth or more. Even Treasury Secretary Bessent has acknowledged the concern in testimony. Deposits fund loans; move them outside the bank and you shrink the credit available to the small businesses, farmers, and households that depend on it.
The deeper objection is structural, and it goes past any single provision. The first piece is regulatory arbitrage: an instrument that looks and pays like a savings account, offered by a platform that carries none of a bank's capital, liquidity, CRA, BSA, or examination burden. The second is consumer confusion — customers may assume a stablecoin is as safe as an insured deposit when there is no FDIC backstop behind it at all. The third is the stability question banks remember firsthand. Signature Bank failed in 2023 on a deposit run heavy with crypto-sector money, and regulators invoked a systemic-risk exception that, together with Silicon Valley Bank, cost the industry roughly $16.7 billion in special assessments. A large pool of yield-seeking stablecoin balances that can move at internet speed is precisely the hot money that turns a wobble into a run.
To be fair to the bill's supporters, there is a real argument on the other side. The digital-asset industry says rewards are not interest, that consumers deserve the option, and that a clear federal market structure is overdue after years of regulation-by-enforcement. Clarity itself is good for banks that want to participate. But "the rules are finally clear" and "the rules tilt the field against insured depositories" can both be true at once, and for a bank the second one is the one that hits the income statement.
The banks are not lobbying alone, and that is part of why this fight has teeth. America's Credit Unions, the movement's largest trade group, wrote to the Senate Banking Committee urging a ban on stablecoin inducements, warning that "advertised yields, promotional rewards, or interest-like payments" would "drain deposits from regulated institutions, constricting the credit that fuels communities." On the deposit disintermediation question, banks and credit unions are on the same side, which is not something you see in most weeks. The credit unions add a second ask: parity. They want explicit authority to participate in digital assets themselves, and the committee bill now authorizes both federal and federally insured state-chartered credit unions to do so. Their message is the same one I give the banks — oppose the yield carve-out, and build the capability to compete.
The crypto and fintech side sees this very differently, and the case is worth understanding rather than dismissing. After months of stalemate, crypto trade groups, Coinbase, and Circle backed the Tillis-Alsobrooks compromise and pressed the committee to move. Coinbase CEO Brian Armstrong reduced his verdict to two words, "Mark it up" — and the company's chief legal officer argued the text preserves activity-based rewards tied to real platform participation, which he framed as exactly what the bank lobby had asked for. Their position: rewards for using a product are not interest on a deposit, consumers deserve the choice, and a federal framework ends years of regulation-by-enforcement. It is also not a small business to them — Coinbase booked about $1.35 billion in stablecoin revenue in 2025, much of it from rewards-driven distribution tied to its USDC partnership with Circle. When one firm earns that much from the precise mechanism in dispute, you understand why both sides are spending so hard, and why the "activity-based" line is where the war is being fought. It is worth noting the banks are fighting on two fronts at once: this yield language in Congress, and a parallel wave of crypto-firm trust-charter applications at the OCC that would let those firms into the bank perimeter directly.
For a large regional bank, the exposure is concentrated in three places.
First, funding. Industry estimates suggest stablecoins could drive a 3% to 5% runoff in core deposits over five years and trim average bank earnings by roughly 3%. For an institution that funds a commercial loan book with relationship deposits, a few points of runoff at the margin is the difference between defending net interest margin and watching it compress.
Second, payments. Stablecoin transaction volume has already surpassed Visa's. Payments are where a regional bank touches its commercial customers daily; cede the rails and you weaken the relationship that anchors the deposit in the first place.
Third, and this is the one regionals underweight, competitive concentration. JPMorgan, Bank of America, and Citi are already building a shared tokenized-deposit network through The Clearing House, targeting 2027. The money-center banks are not waiting for the CLARITY Act to resolve; they are building the response now. The open question is whether tokenized deposits stay concentrated among the largest institutions or spread to regionals and community banks. A regional that sits this out does not just face stablecoin competition — it risks being locked out of the bank-side answer to it.
The reflex is to treat this as a regulatory problem to wait out. It is not. It is a strategy problem to get in front of, and a large regional has more options than it thinks.
Start with tokenized deposits. Unlike a stablecoin, a tokenized deposit is simply a bank deposit represented on a programmable ledger — same insurance, same regulatory treatment, same credit profile — and it keeps the funds inside the banking system while matching stablecoins on programmability and round-the-clock settlement. It is the most direct way to answer the yield threat without surrendering the deposit. I made the broader case in "The Future of Money: Stablecoins, Tokenized Deposits, and the New Payment Rails" and in "Your Deposits Are Going Digital."
But the capability has to exist before it can be used. That means the unglamorous work: a core and payments architecture modern enough to support digital-asset rails, API-first integration, and a deposit strategy built on primacy and treasury services rather than rate alone. The banks that modernize the stack now will have the option to participate when programmable money becomes table stakes; the banks that do not will be spectators. The decision a regional makes about its infrastructure in the next twelve months will largely determine whether it has a seat at the table in 2027.
It would be naive to discuss this bill without the money around it. The crypto industry's super-PAC network, Fairshake, went into the 2026 cycle with roughly $190 million on hand — bankrolled by Coinbase, a16z, Jump Crypto, Uniswap, and Ripple, with Coinbase alone having put in more than $75 million in 2024 and committing tens of millions more for the midterms. In the last cycle the same network raised over $260 million and spent more than $125 million electing crypto-friendly candidates and targeting skeptics — a record both parties watched closely. On federal lobbying alone, crypto spent more than $18 million in just the first half of 2025, outpacing the banking industry. The CLARITY Act sits squarely in that network's interest, and Fairshake backs it.
The banks are not bystanders. The ABA and its peers are running a full-court lobbying press, and the fight has turned personal enough that Eric Trump publicly accused bank lobbyists of spending millions to kill stablecoin yields. But on the spending that aims squarely at the ballot box, the banking industry is, for once, the underdog. That asymmetry is the single most important thing to understand about why a bill that threatens insured deposits enjoys bipartisan momentum: a lot of members are staring at a very large checkbook on one side of the table. Which is exactly why the one currency banks still hold — the voice of a named, in-district employer and lender — is worth spending before the floor vote, not after.
Here is the part that is not optional. Whatever your digital strategy, the bill is mid-flight and the yield language is the single most contested provision in it. This is the moment advocacy actually moves something — before the Banking and Agriculture versions are merged and sent to the floor, not after.
So contact both of your senators, and do it as the institution, not as an industry abstraction. Tell them what a few points of deposit runoff does to lending in your specific markets — the small-business lines, the agricultural credit, the mortgages funded by local deposits. Ask them to close the stablecoin-yield loophole and insist on a level playing field between insured depositories and stablecoin issuers. Coordinate with the ABA's campaign so your message reinforces a national one, and lean on your state association. If your senators sit on Banking or Agriculture, your voice carries further still. Find their direct contacts here. A bank that will spend months negotiating a vendor contract should be willing to spend an afternoon on the law that governs its funding base.
The CLARITY Act will likely become law in some form, and on balance a clear federal market structure for digital assets is healthier than the enforcement roulette that preceded it. The fight is not about whether the bill passes; it is about the terms — and specifically whether it lets a yield-bearing instrument pull insured deposits out of the banking system on an uneven field. For a large regional bank, the response runs on two tracks at once: build the tokenized-deposit and payments capability that lets you compete and pick up the phone to your senators while the text is still being written. Neither track waits for the other. Both close when the floor vote is called.
CCG Catalyst advises community and regional banks, credit unions, and fintech companies on digital-asset strategy, payments modernization, deposit strategy, and regulatory engagement. If your institution is weighing what the CLARITY Act and the shift to programmable money mean for its funding base, reach out to our team at www.ccgcatalyst.com. For related reading, see "The Future of Money: Stablecoins, Tokenized Deposits, and the New Payment Rails" and the full library at CCG Insights.
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By: Paul Schaus | Founder & Managing Partner, CCG Catalyst Consulting
Disclaimer: The views expressed in this article represent the perspective of CCG Catalyst Consulting based on our direct experience advising financial institutions. This commentary is intended to stimulate industry discussion and does not constitute legal, accounting, or regulatory advice.
