Senate Banking Committee to Mark Up CLARITY Act on May 14: Key Crypto Bill Faces Critical Stablecoin Compromise Test

The Senate Banking Committee is set to mark up the CLARITY Act on May 14, providing the stalled crypto-market-structure bill its clearest path this year toward a committee vote. The hearing would transition one of Congress’s most closely watched digital-asset bills from private negotiations into a public amendment process, where lawmakers will test whether a fragile compromise on stablecoin incentives can withstand pressure from banks, crypto firms, and Democrats seeking stricter ethics language.

The committee’s step is significant because the Banking Committee controls a central piece of the Senate’s market-structure package. Any text approved by the panel would still require reconciliation with the Senate Agriculture Committee’s work before the legislation could advance to the Senate floor.

The bill has been a top priority for the crypto industry in Washington, as it aims to establish a broader federal framework for digital-asset markets. This includes clarifying how tokens are classified, which agencies oversee trading activity, and how intermediaries operate under federal law.

Stablecoin Compromise Faces Critical Test

The latest calendar move suggests Senate negotiators have made enough progress to bring the bill into the open, though major points of friction remain unresolved. The immediate test centers on compromise language negotiated by Sens. Thom Tillis and Angela Alsobrooks to resolve a dispute over stablecoin-linked incentives.

The proposal would restrict yield-like payments on passive stablecoin reserve holdings while preserving room for rewards tied to active use. Crypto firms argue that this distinction is necessary to protect ordinary customer rewards and transaction-based incentives. However, banking groups contend that the language could still allow digital-asset companies to offer products functioning too similarly to interest-bearing accounts.

The compromise helped revive negotiations after months of uncertainty over the bill’s direction. In January, Coinbase Chief Executive Officer Brian Armstrong announced that the exchange was withdrawing support due to concerns about stablecoin yield restrictions and other provisions.

Banks Warn of Deposit Erosion and Regulatory Loopholes

Since then, the debate over stablecoin yields has become a proxy for a broader dispute over how much room crypto firms should have to compete with banks for customer balances. Banking groups have urged lawmakers to tighten the language before the markup, warning that stablecoin rewards could draw deposits away from federally insured institutions and reduce the funding base used for mortgages, small-business loans, and agricultural credit.

In a May 8 letter, a coalition led by the American Bankers Association argued that Congress should close what it describes as an interest loophole. The groups have pressed senators to prevent crypto firms from using transaction rewards, loyalty programs, or other incentives to replicate yield products through alternative wording.

"Stablecoins lack the protections and community-lending function of bank deposits."

Lorrie Trogden, president and chief executive officer of the Arkansas Bankers Association, highlighted the risks of stablecoin adoption replacing traditional banking deposits.