One of Washington's most significant crypto bills is now caught in a standoff that analysts say banks cannot ultimately win. TD Cowen's Washington Research Group Managing Director Jaret Seiberg said that U.S. banks will likely fail in their bid to retroactively restrict stablecoin yield programs through the Digital Asset Market Clarity Act (CLARITY Act), but cautioned that the fight could drag on long enough to derail the entire bill before it clears the Senate.

The dispute centers on whether platforms like Coinbase can legally pay users roughly 4% annual yield on USDC, the dollar-pegged stablecoin issued by Circle. The GENIUS Act, which passed with strong bipartisan support in 2025 (68 to 30 in the Senate, 308 to 122 in the House), barred stablecoin issuers from paying yield directly. It left open a grey area for third-party platforms to run their own reward programs. Banks want the CLARITY Act (H.R. 3633), a separate market structure bill that has already cleared the House and is now stalled before the Senate Banking Committee, to close that gap retroactively.

"To us, the banks will eventually lose on this issue politically as they are arguing against consumers getting paid money," Seiberg wrote in a research note. "Yet this fight could extend long enough to put CLARITY at risk."

The Bank Policy Institute and the American Bankers Association argue that 4% returns on USDC will pull deposits away from traditional savings accounts, threatening the capital banks use for local lending. Their joint statement called for rules that "embrace financial innovation without undermining safety and soundness, and without putting the bank deposits that fuel local lending and drive economic activity at risk." Coinbase, which reported $1.3 billion in stablecoin revenue in 2025 primarily through its USDC arrangement with Circle, has withdrawn support for the CLARITY Act in its current form. CEO Brian Armstrong publicly rejected the amendments on January 14, in remarks that framed the changes as a direct threat to Coinbase's stablecoin revenue stream.

The Office of the Comptroller of the Currency added a new complication on February 25. In a 376-page proposed rulemaking to implement the GENIUS Act, the OCC introduced a "rebuttable presumption," a legal standard under which affiliate or third-party yield arrangements would be assumed to violate the issuer yield ban unless proven otherwise. Former FDIC lawyer Todd Phillips noted that "there's some play in the joints of what the OCC has proposed," suggesting the agency's framing leaves room for legal challenge or restructuring. The rule opens a 60-day public comment window, meaning no final version arrives before mid-2026 at the earliest. TD Cowen identified three vulnerabilities in the banks' position: the OCC could shift course after public comment, platforms could restructure agreements to fall outside the presumption threshold, and courts could ultimately strike down the final rule. A series of White House mediation sessions between banking and crypto representatives have produced little movement. At the February 10 meeting, banks reportedly presented a document demanding a total prohibition on any consideration, financial or otherwise, paid to stablecoin holders.

The yield dispute is not the only obstacle in the Senate. Democratic senators have conditioned their support on additional measures, including stronger anti-money-laundering rules for decentralized finance protocols, restrictions on senior government officials holding crypto assets, and the confirmation of pending CFTC and SEC appointments. These demands represent a separate layer of political complexity beyond the banking industry's yield objections and further complicate the bill's path to a floor vote.

The consequences of a delayed or weakened CLARITY Act reach well beyond Wall Street and Silicon Valley. In sub-Saharan Africa, stablecoins account for 43% of all crypto transaction volume, according to TRM Labs. In Nigeria alone, 28% of the population uses stablecoins, and Nigeria, Kenya, and South Africa together represent 12% of global USDC peer-to-peer transaction volume. Across South Asia, crypto adoption grew 80% in the first half of 2025 compared to the same period in 2024, with 5.7 million USDC wallet addresses active in India as of 2024. For users in these regions, stablecoin yield programs are not investment vehicles. They are incentives to hold dollars digitally rather than converting back to local currencies. The Nigerian naira lost over 40% of its value between 2023 and 2024, making dollar-denominated instruments a practical hedge against depreciation. In Pakistan, persistent inflation has steadily eroded the purchasing power of the rupee, creating similar pressure toward dollar-pegged alternatives, though the dynamics differ from the naira's discrete multi-year decline. If yield is restricted on U.S.-issued stablecoins, analysts warn users will migrate toward offshore alternatives. Ethena's USDe, a synthetic dollar backed by delta-neutral crypto positions, is already the world's third-largest stablecoin at roughly $9.5 billion in circulation. Its supply grew 70% within weeks of the GENIUS Act passing in July 2025, as users sought yield alternatives outside U.S. jurisdiction. Unlike USDC, USDe operates outside U.S. regulatory jurisdiction and is less regulated, less transparent, and carries significantly higher structural risk.

Western Union's planned 2026 launch of USDPT, a Solana-based stablecoin issued through Anchorage Digital Bank and targeting the Middle East, Africa, and South Asia corridor (a region that accounts for 18% of Western Union's consumer transfers), signals that institutional players are already positioning around this regulatory moment. What incentive features USDPT can legally offer will depend heavily on how the OCC's comment period resolves and whether the CLARITY Act reaches a floor vote intact.

Nigeria's 2025 Investment and Securities Act, which established the first dedicated stablecoin regulatory framework in sub-Saharan Africa, adds a further dimension to the global stakes. The legislation may use the OCC's "presumed illegal" standard as a template, meaning that how U.S. regulators resolve the yield question could shape stablecoin rules across the continent.

JPMorgan analysts separately forecast the CLARITY Act passes by mid-year 2026, and betting markets currently show 70% odds of passage this year. The Senate Banking Committee markup is now expected in mid-to-late March after a March 1 deadline for a negotiated deal was missed. The OCC public comment window closes in late April, meaning the regulatory and legislative calendars are running in parallel with no guarantee of coordination. Whether that markup produces a bill crypto companies can support, or one that pushes more users and capital offshore, remains the central question of U.S. digital asset policy in 2026.