The Senate Banking Committee on Thursday began debating the CLARITY Act, the most ambitious federal stablecoin legislation this year, as lawmakers filed a flurry of amendments that could reshape the bill's core provisions. The committee vote, originally scheduled for May 14, came after the American Bankers Association sent more than 8,000 letters to Senate offices demanding changes to stablecoin yield restrictions. Senators Warren, Reed, and Smith each introduced amendments targeting everything from crypto's access to the banking system to whether digital assets can be used for tax payments.
The stablecoin yield fight
The CLARITY Act's stablecoin yield provisions would prohibit issuers, exchanges, custodians, and wallet providers from offering deposit-like yield products. That language drew immediate pushback from the American Bankers Association, which argued the restrictions were too broad. Senators Reed and Smith filed an amendment to incorporate the banks' preferred changes, softening the yield ban. The amendment's fate is unclear, but it has split the usual bipartisan alignment on the bill.
Warren's banking gambit
Senator Elizabeth Warren filed over 40 amendments, but the most consequential would prevent the Federal Reserve from issuing master accounts to crypto companies. That move would effectively close the pathway for crypto firms to access the traditional banking system. Warren also backed a Reed amendment that would prohibit crypto from being used as legal tender, including for tax payments. The two amendments together represent a broadside against crypto adoption, forcing committee members to choose between innovation and consumer protection.
Market recovery stalls
While lawmakers debated, the broader crypto market sat near $2.68 trillion, recovering from February correction lows around $2.2 trillion. The market reclaimed its 200-week moving average near $2.55 trillion but remains below the 50-week MA near $3 trillion and the 100-week MA near $3.2 trillion. Volume has declined compared to the February selloff, suggesting forced selling has cooled but new capital inflows haven't fully returned. The regulatory uncertainty in Washington isn't helping sentiment.
A packed amendment calendar
Committee members are expected to vote on the underlying CLARITY Act after debating the amendments. With over 40 changes on the table, the process could stretch into the evening. The outcome will determine whether the bill heads to the full Senate floor or stalls in committee. The Reed amendment on legal tender and Warren's master account ban are the two flashpoints that could make or break the bipartisan coalition behind the legislation.
