Senate weighs stablecoin rewards as clarity act crypto negotiations intensify with banks

Lawmakers and financial lobbyists are racing to shape the Digital Asset Market Clarity Act, with the clarity act crypto debate now centered on how far stablecoin rewards can go.

Senate pushes forward amid banks and crypto standoff

The U.S. Senate is working to advance the Digital Asset Market Clarity Act in 2026, yet a sharp standoff between major banks and the crypto industry continues to slow progress. On Tuesday, Senator Angela Alsobrooks, a Democrat on the powerful Senate Banking Committee, told an American Bankers Association summit in Washington that both sides will need to compromise.

“I think I have to level set that all of us will probably walk away just a little bit unhappy,” Alsobrooks said, signaling that neither the banking sector nor digital asset firms will get everything they want. However, she stressed that without give-and-take, the bill will remain stuck, leaving regulatory uncertainty in place for markets and consumers.

The main flashpoint is stablecoin rewards. Large banks fear that if crypto platforms can freely pay yield on stablecoin holdings, customers will shift deposits out of traditional savings accounts. Moreover, the American Bankers Association has been lobbying aggressively to close what it views as a loophole in the current legislative draft.

The stablecoin rewards compromise taking shape

On the other side, the crypto sector has already agreed to a key concession. Platforms would not pay rewards on stablecoin balances that simply sit in an account without activity. That said, industry groups are still pushing to preserve rewards tied to active transactions such as spending, trading, or other on-chain use.

JPMorgan Chase CEO Jamie Dimon recently indicated that the banking industry could potentially live with transaction-linked incentives. His remarks roughly align with what crypto representatives have proposed in meetings at the White House, where they have emphasized that dynamic rewards could still support innovation without draining bank deposits.

Alsobrooks is now working with Republican Senator Thom Tillis to craft language that both camps can accept. Their emerging compromise would allow some limited stablecoin rewards, but only when tied to active transactions rather than static balances. However, they still must convince skeptical banks that this structure will not trigger a large-scale outflow from traditional accounts.

Senator Mike Rounds, another member of the Senate Banking Committee, said on Tuesday that he remains unsure about the best design for stablecoin rewards. Even so, he suggested that linking incentives to account activity instead of account size could be a viable approach, underscoring how the stablecoin rewards debate is shaping the bill’s final contours.

Senate Banking Committee markup and political hurdles

The Banking Committee had previously scheduled a formal markup hearing on the legislation, but that session was delayed amid ongoing negotiations. A new senate banking committee markup could take place by the end of March, largely depending on whether Tillis chooses to back the current draft text and its rewards framework.

Tillis has not yet committed to supporting the bill. He met multiple times last week with industry figures and White House officials but wants at least one more round of coinbase and banking talks before deciding. Moreover, he is expected to consult with bank trading groups who remain wary of any perceived competitive edge granted to digital asset platforms.

If the Banking Committee ultimately approves the proposal, the bill will be merged with the version that already cleared the Senate Agriculture Committee. From there, the combined package would move to a full Senate vote, requiring a significant group of Democrats to cross the aisle. However, securing that support is far from guaranteed given ideological divisions over crypto legislation progress.

Democratic concerns and regulatory gaps

Several Democrats have raised separate concerns that could still derail or delay the process. They have pointed to unresolved questions around decentralized finance, vacant seats at the CFTC and SEC, and ethics rules for senior government officials who hold digital assets. Those ethics worries are widely seen as a veiled reference to President Trump and other high-profile officeholders with personal crypto portfolios.

There are also serious time constraints on the Senate calendar. Floor time remains tight, and competing priorities such as foreign policy debates and Trump’s push for a nationwide voter-ID bill could push digital asset reforms lower on the agenda. That said, supporters argue that establishing a clear digital asset market clarity framework is increasingly urgent for both investor protection and U.S. competitiveness.

In parallel, the U.S. Office of the Comptroller of the Currency has proposed a rule aligned with last year’s GENIUS Act stablecoin law. The crypto industry contends the draft regulation still leaves enough space to operate the transaction-based rewards programs they have been presenting to lawmakers, reinforcing their argument that regulatory agencies and Congress can move in tandem.

Market odds and industry expectations

Prediction market platform Polymarket currently assigns a 69% probability that Trump will sign the Digital Asset Market Clarity Act into law this year. In a further show of optimism, Solana Policy Institute President Kristin Smith has forecast that the CLARITY Act will clear Congress by July, despite the crowded legislative docket and remaining disputes over transaction based rewards.

Industry associations say negotiations are moving in the right direction but caution that the process is not finished. Moreover, they are already drafting contingency strategies in case the Banking Committee markup slips beyond March, which could compress the window for passage in 2026. For them, the clarity act crypto package remains central to unlocking long-term regulatory certainty for digital asset markets.

Overall, the bill’s fate will depend on whether senators can finalize a narrow compromise on stablecoin rewards while addressing broader political concerns, all before the clock on the 2026 legislative calendar runs out.