The Senate crypto bill, which aims to bring much-needed regulatory clarity to the U.S. digital-asset market, has encountered one of Washington’s oldest power centers: the banking lobby.
The CLARITY Act cleared the Senate Banking Committee in May, but the Senate went on recess in August without voting on it. One particular provision has proven particularly contentious. Banks have mounted a fierce lobbying campaign to stop crypto exchanges from being able to make rewards on stablecoin deposits.
Read more: Congress Crypto Bill Delay: CLARITY Act Vote Pushed to September as 2026 Passage Hopes Fade
Contents
What Is the Senate Crypto Bill Trying to Do?
The Senate crypto bill, or the CLARITY ACT, is set to create a federal market structure for digital assets. The text would:
- Determine which assets are securities and which are commodities
- Provide regulatory clarity on the SEC’s and CFTC’s jurisdictions
- Require registrations from market makers
- Set out rules for fundraising, custody, anti-money-laundering, and decentralized finance
The House of Representatives passed the initial version of the Senate crypto bill in July 2025. The Senate Banking Committee advanced the Senate version in a 15–9 party-line vote on May 14, 2026.
For the crypto industry, CLARITY is one of the most important pieces of legislation in history. Crypto firms have long been at odds with a system that requires them to navigate an uncertain regulatory environment, including ambiguous securities laws.
Why Banks Are Fighting Stablecoin Rewards
The banking sector is opposing the idea to enable crypto exchanges to make rewards on stablecoins. The GENIUS Act, the initial version of the Senate crypto bill, already prohibited direct yield payments on payment stablecoins. The banking lobby, however, argued that the language failed to explicitly prohibit rewards from affiliated third-parties.
The language the Senate crypto bill currently uses prevents direct interest payments like those on a bank deposit. At the same time, it permits rewards “related to a customer’s transaction, payment activity or other activity.” The banking sector has argued that this differentiation is too vague.
The issue has attracted the attention of several banking groups, including the American Bankers Association (ABA), Independent Community Bankers of America (ICBA), Bank Policy Institute, Consumer Bankers Association, and Financial Services Forum. These groups have called upon lawmakers to also prohibit yield and rewards from third-party entities.
Related: CLARITY Act Faces Five Major Loophole Claims as Trump’s $14B Crypto Profits Fuel Scrutiny
The reasoning is simple. If consumers can park their money on a crypto exchange while earning rewards, they would be less inclined to keep cash at traditional banks.
How Banking Lobbyists Are Fighting the Senate Crypto Bill
The conflict over stablecoin rewards is no longer a technical squabble. The ICBA is calling it “a deposit flight,” in which community banks would lose billions in deposits to yield-bearing stablecoins.
In July, the ABA, ICBA, and dozens of state associations argued that the Senate crypto bill did not do enough to prevent stablecoins from encroaching on the traditional banking sector’s deposits. In early August, another group of state associations wrote to the Congress demanding changes to CLARITY before its floor vote.
Their position is based on two assumptions:
- The deposits paid into stablecoins would have gone to the traditional banking system.
- The ability to make loans is what fundamentally differentiates banks from crypto platforms.
According to the ICBA’s estimates, a wide-scale adoption of yield-bearing stablecoins would drain $1.3 trillion from community-bank deposits and reduce lending by around $850 billion.
These figures are, of course, estimates used to score political points. Nevertheless, the figures demonstrate how seriously the banking sector views this issue. By pointing to the losses suffered by community banks, lawmakers can tie the Senate crypto bill to a campaign to save the rural economy and communities.
Banks typically rely on the deposits to fund their lending activities. The introduction of yield-bearing stablecoins adds another layer of competition for deposits.
Crypto companies, on the other hand, argue that CLARITY already prohibits passive rewards that are economically equivalent to interest-bearing deposits. Coinbase CEO Brian Armstrong pointed out that most of the lobbying efforts have already been satisfied by the bipartisan compromise. Therefore, the dispute over rewards has been concluded and should not derail negotiations over the Senate crypto bill.
Why the Senate Crypto Bill Is Suddenly in Trouble
The banking sector is not the only reason why the Senate crypto bill has been under threat. Lawmakers have yet to iron out a few key details, including ethics rules for government officials, President Trump’s crypto-related businesses, anti-money laundering regulations, and rules concerning decentralized finance.
That being said, the battle with the banking lobby complicates the situation. The Senate crypto bill requires a 60-vote majority to clear the upper chamber.
Republicans are unlikely to achieve that number on their own. Several influential senators have expressed concerns about CLARITY’s impact on community banks. The full Senate, however, failed to vote on the measure when it reconvened in August. Senate Majority Leader John Thune has scheduled a procedural vote for September 15.
Read more: CLARITY Act Odds Collapse to Record Low as Senate Delays Shake Crypto Market Confidence
This timeline is concerning. It is unclear whether CLARITY will be able to get through the full Senate before the November elections. The closer the vote to the election day, the less likely it becomes that a bipartisan coalition will be mustered.
Could the Banking Lobby Actually Kill the CLARITY Act?
The Senate crypto bill can, theoretically, still fail, but not solely because of the banking lobby. Both the crypto industry and the Trump administration assign high priority to this legislation. It has broad bipartisan support in the Senate Banking Committee.
That being said, the banking lobby is in a strategically strong position The required majority is 60 votes, which means that a fairly small number of senators could derail the Senate crypto bill.
The banking sector is openly advocating for a ban of stablecoin rewards, but community banks are private entities. In theory, their ability to compete for deposits is limited only by their capacity to innovate and attract more customers. Crypto companies, on the other hand, cannot control whether or not the federal lawmakers will pass a bill that could significantly weaken their business.
What Happens Next for the Senate Crypto Bill?
September 15 is fast approaching, and so is the next procedural vote on the Senate crypto bill. If lawmakers manage to find a compromise on the stablecoin rewards, ethics rules, and a few other issues still outstanding, the Senate crypto bill has a decent chance of clearing the Senate. If the vote fails, it will be much more difficult to get the bill to the White House before the November elections.
Even if the Senate manages to approve the Senate version of the bill, it will have to reconcile its version with the House’s bill in the fall. Both chambers must agree on the language before the legislation can be sent to the President for his approval.
The banking lobby has already managed to convince senators to change the language several times. Crypto companies have demonstrated their willingness to withdraw support when the lobbying efforts have gone too far. The entire dispute over the Senate crypto bill’s stablecoin rewards is really about the ability of traditional banks to compete with crypto exchanges.
FAQ
What is the Senate crypto bill?
The Senate crypto bill refers to the upper chamber’s iteration of the law, which seeks to establish a federal regulatory framework for digital assets, crypto exchanges, token issuers, stablecoins, and other market participants.
Why are banks opposing the CLARITY Act?
Banking groups have lobbied extensively to remove provisions that would have enabled crypto exchanges to make rewards on stablecoin balances. They argue that the ability to make rewards will lead to a flight of deposits from the traditional banking system.
Does the CLARITY Act prohibit stablecoin yield?
No, the current language only restricts rewards that provide yield similar to those of a bank deposit. The Senate version of the crypto bill allows for rewards that are “related to a customer’s transaction, payment activity, or other activity.”
When will the Senate vote on the CLARITY Act?
The next procedural vote on the Senate crypto bill is scheduled for September 15, following the August recess.
Can the Senate crypto bill pass in 2026?
The Senate crypto bill can still pass, but the prospects are growing steadily more challenging by the day. The measure requires a 60-vote majority to clear the Senate, and there are several contentious issues that must first be resolved before the vote can take place.
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