CLARITY’s delay to test Wall Street’s $6.6 trillion stablecoin warning which is at odds with White House view

A notable development has hit the crypto markets. The CLARITY Act has stalled in Senate Banking deliberations, setting back an array of market rules that would solidify into law most of the pro-crypto stance that took hold in the President Donald Trump administration. Yet, Congress may have handed crypto markets an unexpected experiment. Galaxy Research puts the odds of enactment this year at roughly 50-50, possibly lower, with unresolved disputes over DeFi provisions, jurisdiction, and stablecoin yield language.

The bill spans token classification, exchange and broker-dealer registration, software carveouts, and DeFi provisions, with the rewards dispute representing one contested layer inside a much larger framework. On the rewards layer is where Wall Street's most concrete stablecoin-related fear lives, and a stall could let the market answer it before Congress does. The rewards lane The GENIUS Act explicitly bars stablecoin issuers from paying interest or yield solely for holding a payment stablecoin, resolving the simplest version of the fight.

Market Dynamics

The harder question is if exchanges and third parties can offer cash back, referral bonuses, or promotional yields without running into the same prohibition. Both the OCC's March proposal and the FDIC's April proposal extended anti-evasion presumptions to some affiliate and related third-party arrangements, narrowing the lane. Yet, both documents are still proposed rules pending finalization, and regulators are still defining the practical scope of what counts as prohibited.

Banks have framed this open perimeter as an existential threat to their competitiveness. The ABA's community bank letter cited up to $6. 6 trillion in deposits as potentially at risk, warning that exchange-funded inducements could pull savings out of the banking system.

Standard Chartered put a more bounded forecast of up to $500 billion in deposit outflows to stablecoins by the end of 2028, with regional banks carrying the most exposure. The argument centers on exchange-funded rewards that make stablecoin balances functionally competitive with bank deposits while avoiding the reserve requirements, capital rules, and insurance costs that banks bear. The White House Council of Economic Advisers published a direct rebuttal in April, finding that eliminating stablecoin yield would increase bank lending by about $2.

Market Impact

1 billion , or roughly 0. 02%, and impose an $800 million net welfare cost. The stablecoin market stood at over $320 billion as of Apr.

27, against roughly $19. 1 trillion in US commercial bank deposits. 66% of the deposit base, stablecoins are large enough to generate competitive friction at the margins and small enough for the system's aggregate funding to hold.

A bar chart shows the stablecoin market at over $320 billion represents roughly 1. 1 trillion US commercial bank deposit base. If the stablecoin market grew from $320 billion to $500 billion and every incremental dollar came from bank deposits, the displacement would be roughly 0.

Crypto markets are watching this development closely as investors weigh its potential impact on prices.