The CLARITY Act markup hit a snag this week after the main deadlock on stablecoin yield was finally resolved by a compromise from Senators Tillis and Alsobrooks. But Senator John Kennedy is still withholding support, partly over frustration with the White House on an unrelated housing bill, and Senate Banking Chair Tim Scott insists all 13 Republican committee members must be on board before moving to a bipartisan markup, which is expected in May.
The stablecoin yield compromise
The Tillis-Alsobrooks deal allows rewards tied to stablecoin usage and activity but bans passive yield on idle balances. That split let some lawmakers get on board — it gives crypto firms a way to attract users without creating a bank-like interest product that regulators could label a security. Banks privately worry that the compromise’s “economically or functionally equivalent” clause could still be gamed, potentially allowing workarounds that blur the line between activity-based rewards and passive yield.
Kennedy’s holdout and the housing bill
Senator John Kennedy isn’t blocking the CLARITY Act purely on crypto grounds. According to people familiar with the talks, he’s also frustrated with the White House over the unfinished 21st Century ROAD to Housing Act — known as the Build Now Act. That bill is stalled, and Kennedy wants movement on it before he gives the White House a win on stablecoins. His holdout is one reason Scott hasn’t scheduled a markup yet.
Scott’s unity push
Chair Tim Scott is taking no chances. He told colleagues he wants all 13 Republicans on the Banking Committee united before the CLARITY Act goes to a markup. That means winning over Kennedy and addressing lingering concerns from other members. The calendar is already tight: a delay past mid-May would make a summer passage path much harder. Galaxy Research puts the bill’s current odds at roughly 50-50.
DeFi protections and bank worries
Two other issues remain unresolved. Protections for noncustodial software developers — language tied to BRCA and Section 1960 — are still being negotiated. The crypto industry calls these protections essential for DeFi development; law enforcement raises anti-money laundering objections. Separately, ethics and AML concerns are still live, and some lawmakers could narrow their support if the final text looks too loose. Meanwhile, banks are quietly lobbying against the “economically or functionally equivalent” clause, fearing it could let non-bank stablecoin issuers sidestep traditional oversight.
With the legislative calendar tightening, a delay past mid-May would make a summer path increasingly difficult, according to Galaxy Research, which puts current passage odds at roughly 50-50.
