CLARITY act stalls as banks push back on stablecoin rewards

Efforts to advance the CLARITY Act, a major US bill aimed at establishing clearer rules for the digital asset market, have slowed after banks raised objections to a proposal allowing rewards for stablecoin users.

The disagreement has complicated negotiations between lawmakers, regulators, and industry participants.

The bill passed the House in July and was seen as a step toward resolving regulatory uncertainty surrounding cryptocurrencies. However, the dispute over stablecoin incentives has emerged as a key barrier.

Attention is shifting to an upcoming roundtable organised by the US Securities and Exchange Commission.

Policymakers and industry representatives will discuss how digital assets should be regulated and whether the bill can regain momentum.

Regulatory framework plans

The CLARITY Act was designed to define how digital assets should be supervised in the United States.

Under the proposed structure, digital commodities such as Bitcoin would fall under oversight of the Commodity Futures Trading Commission.

Crypto assets that meet the definition of securities would remain under the authority of the US Securities and Exchange Commission.

Lawmakers supporting the bill say the division could remove confusion around regulatory responsibilities.

The system has often left companies uncertain about whether their products fall under commodities rules or securities regulations.

A clearer framework is intended to help crypto companies operate within legal boundaries while giving regulators tools to monitor risks in the digital asset market.

Stablecoin reward dispute

Negotiations stalled because of disagreement over whether stablecoin issuers should be allowed to offer rewards to users.

Crypto companies want to provide incentives of around 3 to 4% to attract users and expand digital payments adoption.

Banks oppose the idea. They argue that offering incentives for holding stablecoins could encourage customers to move money away from bank deposits and into crypto wallets.

Some financial institutions warn that such shifts could affect liquidity in the banking system.

Estimates cited by banks suggest stablecoins could draw as much as $500 billion from deposits in the coming years.

A decline in deposits could limit the funds banks use to support lending activity across the economy.

White House compromise

The White House attempted to resolve the dispute by proposing a compromise related to how rewards could be distributed.

The proposal allowed stablecoin incentives only for specific uses, such as peer-to-peer payments. It would also prohibit rewards for stablecoins that remain idle in digital wallets.

Many crypto companies supported the compromise because it would still allow them to compete for users in digital payments. Banks rejected the plan and pushed for stricter limits.

Following the disagreement, Donald Trump criticised banks on Truth Social and said he would not allow them to undermine his crypto agenda.

SEC roundtable ahead

Despite stalled negotiations, discussions about crypto regulation continue.

The US Securities and Exchange Commission has scheduled a roundtable for April 16 to review how federal securities laws should apply to digital assets.

Regulators and industry participants are expected to discuss how future rules could balance innovation in the crypto sector with investor protection.

With banks still opposing stablecoin reward provisions, many observers believe the CLARITY Act may not become law until 2026.