The US Senate Banking Committee is scheduled to hold a markup vote on May 14 on the Digital Asset Market Clarity Act, known as the CLARITY Act. A markup is the committee-level stage at which members may amend legislation and vote to advance it before any floor vote takes place. The bill would establish federal rules for token classification, exchange oversight, and stablecoin returns. The CLARITY Act has already cleared the US House of Representatives, which passed it in July 2025 as part of a two-bill arc that also saw the GENIUS Act signed into law that same month. The Senate Banking Committee markup is the next major hurdle on the Senate side. But a fight between the banking industry and crypto advocates over a single provision is threatening to derail the vote before it happens.

At the centre of the dispute is Section 404 of the CLARITY Act, which addresses whether stablecoin issuers should be allowed to pass reserve income back to holders, a feature that banks argue is functionally identical to a savings account. Stablecoins are digital tokens pegged to a reference asset, usually the US dollar, and issuers typically park reserves in short-term US Treasuries. Those reserves generate income, and the question is who gets to keep it. A bipartisan compromise drafted by Sen. Thom Tillis (R-NC) and Sen. Angela Alsobrooks (D-MD) tries to split the difference: it would prohibit payments that mimic bank deposit interest while allowing rewards tied to platform activity, similar in structure to credit card loyalty points. Five major US banking trade groups formally rejected that language. Committee Chair Tim Scott (R-SC) has said he wants all 13 Republican members behind the bill before proceeding.

The stakes extend well beyond Washington. The stablecoin market grew 49 percent during 2025 to reach $306 billion, and has since crossed $320 billion as of May 2026. Stablecoins accounted for roughly 75 percent of total crypto trading volume in Q1 2026. On-chain transaction volume reached $10.9 trillion in 2025, a 91 percent year-on-year increase. USDT, issued by Tether, holds approximately $185 billion of that market and dominates on the TRON network, which is the primary rail for low-cost peer-to-peer transfers across sub-Saharan Africa, South Asia, and the Gulf. The CLARITY Act will not directly bind issuers outside the US, but its definitions will ripple outward. Regulators in South Africa, Kenya, Pakistan, and India are all monitoring the legislation, though the depth of engagement varies considerably. India, the world's largest remittance recipient with inbound flows of roughly $120 billion annually, has no enabling regulatory framework for stablecoins; the Reserve Bank of India and SEBI are cautious but attentive to global developments rather than actively drafting rules. US legislative language nonetheless tends to become a reference point for regulators across the region.

South Africa's Crypto Asset Regulatory Working Group has already identified six locally issued stablecoins, all from non-bank entities, and flagged gaps in reserve and redemption standards. Kenya's Virtual Asset Service Providers Bill became law in October 2025, but stablecoin-specific rules remain underdeveloped. Pakistan has formed dedicated crypto government agencies and is building toward a formal licensing framework in 2026, with regulators actively watching US precedent for its stablecoin implications. Nigeria, where stablecoin adoption is already reshaping remittance flows outside formal banking channels, faces a similar set of open regulatory questions. In India, USDT on TRON is already informally used by diaspora workers in the Gulf and Southeast Asia. If the CLARITY Act permits activity-based rewards to survive, builders could design incentive products targeting South Asian and African remittance corridors without needing a US banking licence. If yield is restricted in any form, some issuers may relocate product development to jurisdictions with lighter requirements, a structural consequence of yield restriction regardless of its degree, and potentially with weaker consumer protections.

The quotes from industry and lawmakers reflect how much pressure has built up. "Every day without a clear legal framework is an invitation for top-tier talent, capital, and innovative companies to locate elsewhere," said Summer Mersinger, CEO of the Blockchain Association. Coinbase CEO Brian Armstrong gave a pointed two-word response to the compromise: "Mark it up." The American Bankers Association warned in a joint statement that widespread stablecoin yield could reduce consumer, small-business, and agricultural lending by one-fifth or more, projecting the stablecoin market could expand from $300 billion to $2 trillion if yield is permitted. That projection is disputed. The White House Council of Economic Advisers has concluded that banks have "little to fear from the rise of stablecoins," a position the ABA explicitly rejected.

Critics within the crypto industry have their own concerns about the compromise. Ji Hun Kim, CEO of the Crypto Council for Innovation, warned that the yield prohibition in its current form extends well beyond the scope of the GENIUS Act, applying to all market participants rather than just stablecoin issuers. That breadth, he argued, could limit legitimate financial innovation.

Digital prediction markets, as of early May 2026, priced the CLARITY Act's passage in 2026 at above 60 percent. Even if the bill clears the committee on May 14, Treasury and the CFTC would have one year to issue implementing rules, meaning enforcement would not begin immediately. For builders working on stablecoin wallet products or yield-bearing DeFi protocols, the practical shift would be from a hold-and-earn model to a spend-and-earn one. For regulators from Lagos to Johannesburg to Karachi, the US vote will provide a template, for better or worse, as they write their own rules.