The US House of Representatives approved the CLARITY Act on July 17, 2025. The bill garnered bipartisan support with 294 voting for the legislation and 124 against. Unfortunately, the success in the House has not carried over to the Senate, as the legislation remains stalled there, apparently due to the banking industry’s unwillingness to concede any ground on stablecoin holders earning interest or generating yield.
According to a report by Punchbowl, Senator Thom Tillis has told the Senate Banking Committee that they need more time to reach a compromise, which pits digital asset firms against legacy banks that fear losing business if stablecoin holders earn yield. The thesis advanced by banks is that higher yields will cause deposit flight, undermining their ability to originate loans. This ignores the fact that legacy banks can simply compete by increasing the rates paid to deposit holders to keep them happy.
The report indicates that the final language may come in May.
Yesterday, the Digital Chamber posted a letter to Senator Tim Scott, Chairman of the Senate Banking Committee, urging a markup hearing on the bill as soon as possible. The letter noted that it has been “270 days since the House passed the CLARITY Act with strong bipartisan support, and we recognize the legislative window for Congress is narrowing.”
Taylor Barr, Government Affairs Director at the Digital Chamber, stated on X:
“Clarity cannot wait. More than 70 million Americans who have embraced digital assets deserve the regulatory clarity they have waited far too long for.”
The Senate’s draft bill prohibits interest on stablecoin balances, while the House version allows passive yield. There appeared to be a workaround at one point that would allow activity-based rewards, but now it seems the entire bill is imperiled.
This raises the question of why the Senate doesn’t show some leadership and move forward with language that creates a level playing field for banks and crypto firms to compete, thus creating value for consumers.
The White House has already published a report claiming the fears of deposit flight are unwarranted. Still, legacy banks continue to push back against any language that might require them to change their operations.