Crypto’s Defining Week Arrives as Senate Considers CLARITY A…

That’s when the Senate Banking Committee is scheduled to mark up the CLARITY Act, potentially moving forward the establishment of a formal market structure framework for cryptocurrencies and digital assets in the United States.

Markups are where bills become politically real. Senators negotiate amendments, pressure-test compromises, and determine whether legislation has enough institutional support to survive floor consideration.

For crypto companies, the implications of Thursday’s session could be existential. Executives have long argued that the United States risks losing blockchain innovation to jurisdictions with clearer frameworks, including the European Union, Singapore and the United Arab Emirates. The industry has framed regulatory ambiguity not merely as a legal inconvenience, but as a competitiveness problem.

Ironically, the industry that once promoted decentralization above all else is now asking Congress for centralized regulatory legitimacy.

See also: Lawmakers Recast Stablecoins as Payments Tools in CLARITY Act Compromise 

Stablecoins Have Become the Battleground

Although the CLARITY Act is broadly framed as market structure legislation, one of the fiercest fights surrounding the bill centers on stablecoins and their relationship to the traditional banking system, particularly that of yield-bearing stablecoin products.

Traditional banking groups argue that allowing crypto intermediaries to offer yield-bearing stablecoin products effectively re-creates deposit-taking activity outside the insured banking system. Their concern is a straightforward one centered around the fact that if consumers begin holding large portions of cash-equivalent balances in stablecoins rather than bank accounts, banks could lose a meaningful share of low-cost deposits that underpin lending activity.

In a new letter to Chairman Sen. Tim Scott, R-S.C., and Ranking Member Sen. Elizabeth Warren, D-Mass., the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Independent Community Bankers of America and National Bankers Association called for “additional changes” that are needed to ensure the bill “clearly prohibits interest-like payments on stablecoins and avoids unintended loopholes.”

Crypto firms see the issue differently. They argue that banning rewards on stablecoin holdings would entrench incumbent banks while limiting competition in digital payments infrastructure. In their view, programmable dollars represent the next evolution of internet-native finance, and restricting incentives would amount to protecting legacy institutions from technological disruption.

A proposed compromise negotiated by lawmakers would prohibit customer rewards on idle stablecoin balances while still allowing incentives tied to transactional activity, such as payments…