US Treasury Secretary Scott Bessent is calling on the Senate to pass the CLARITY Act before summer. In a Wall Street Journal op-ed, he wrote that regulatory ambiguity had pushed crypto development to jurisdictions with clearer rules. The CLARITY Act crypto regulation is long overdue, according to Bessent.
Bessent was unusually blunt in his assessment. Moreover, the benefits of being domiciled in the US had rarely outweighed the risks for crypto firms, he argued. He also tied economic security directly to national security. With this framing, the Treasury Secretary explicitly places crypto regulation in a geopolitical context.
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CLARITY Act: three-tier system for digital assets
House Financial Services Chairman French Hill introduced the CLARITY Act (H.R. 3633) on May 29, 2025. On July 17, the House passed the bill 294 to 134. This bipartisan majority emerged during the so-called "Crypto Week" in Congress.
At its core, the legislation establishes a three-tier classification system for digital assets. It divides oversight between the SEC and the CFTC. Specifically, the CFTC receives exclusive jurisdiction over spot markets for digital commodities, while the SEC retains authority over "Investment Contract Assets." In addition, new registration requirements apply to digital commodity exchanges, broker-dealers, and custodians. Experts widely consider the longstanding jurisdictional dispute between the two agencies one of the biggest obstacles to institutional crypto engagement in the US.
The law complements the GENIUS Act, signed into law in July 2025, which mandates 1:1 reserve requirements for stablecoins. Together, the two laws form the regulatory foundation of the Trump administration's digital asset framework.
Stablecoin interest payments as the core conflict in the Senate
In the Senate, the CLARITY Act has stalled for months. The main point of contention is whether crypto firms like Coinbase should be allowed to offer interest on stablecoins. JPMorgan and Bank of America warned that such a provision could trigger a loss of up to $6.6 trillion in bank deposits.
However, the data tells a different story. On April 8, the White House Council of Economic Advisers published an analysis that undermines the banking industry's argument. According to the study, banning stablecoin interest would increase bank lending by just $2.1 billion, equivalent to 0.02 percent. Community banks would see virtually no benefit. At the same time, the study estimates the consumer welfare loss at $800 million. Furthermore, stablecoin reserves would largely remain within the banking system regardless.
The White House positioning is notable. President Trump publicly sided with the crypto industry against the major banks as early as March. The CEA study now provides the economic ammunition for this stance. Meanwhile, Senators Thom Tillis and Angela Alsobrooks introduced a compromise on March 20. Under their proposal, passive stablecoin interest remains prohibited. However, activity-based rewards for payments, transfers, and platform usage are permitted.
Senate blockade and postponed markups
The legislative history in the Senate reads as a series of delays. As early as July 2025, Senator Tim Scott and Cynthia Lummis released a discussion draft. A 182-page draft of the Responsible Financial Innovation Act followed in September. Subsequently, David Sacks, White House advisor for crypto and AI, announced a Senate markup for January 2026 in December 2025. The Banking Committee postponed it on the scheduled day.
In February 2026, Bessent appeared before the Senate Banking Committee. There, he called opponents within the industry a "nihilistic group that prefers no regulation to this very good regulation." Anyone who did not want the law should move to El Salvador, he added. The remarks were far from diplomatic. Yet they signaled how seriously the administration takes the timeline. According to negotiators, the stablecoin interest dispute is "99 percent resolved." Senate Republicans are now considering attaching deregulation provisions for community banks to the CLARITY Act, therefore creating a new stumbling block.
Closing window before the midterms
What often goes unnoticed is that the political calendar works against the CLARITY Act. Senator Bernie Moreno warned that without progress by May, Congress may not revisit digital asset legislation for years. The 2026 midterm elections further narrow the legislative window. As a result, the Senate Banking Committee markup planned for late April becomes the decisive moment.
The dynamics in Congress remain complex nonetheless. Cynthia Lummis, one of the most prominent crypto advocates in the Senate, struck a sobered tone after a closed-door GOP meeting. The path forward was "not the one she had expected." Despite broad support in the House, Senate passage remains the most difficult step.
For the crypto industry, the stakes are high. The CLARITY Act would establish clear jurisdictional boundaries between the SEC and CFTC for the first time. In doing so, it would end the era of "regulation by enforcement" under former SEC Chair Gary Gensler. JPMorgan analysts describe passage by mid-2026 as a positive catalyst for institutional scaling and tokenization. Notably, the same major banks actively fighting stablecoin interest stand to benefit from the new crypto custody rules.
