Sen. Tim Scott signaled a potential breakthrough this week in a key sticking point that has stalled the Senate’s crypto legislation: how to treat third‑party yield on stablecoins.
Speaking at a crypto lobby event in Washington, the Senate Banking Committee chair said he expects “to have the first proposal in my hands to take a look at” — and if that arrives before week’s end, “I think we’re going to be in much better shape.” That proposal would aim to bridge a growing rift between banks and crypto firms over a provision that has held up the Digital Asset Market Clarity Act (commonly called the CLARITY Act).
What’s the fight about?
- The disputed clause would ban third parties from offering yield on stablecoins. Banks say such yield products create a regulatory loophole that could siphon deposits away from traditional banks. Crypto industry advocates counter that a ban would be anti‑competitive and would blunt user incentives for using stablecoins and DeFi services.
- The CLARITY Act is meant to map regulatory jurisdiction over digital assets and clarify the roles of the SEC and the CFTC. That division of authority is central to how the market will be governed going forward.
Where things stand in Congress
- The Senate Banking Committee, which oversees the SEC, indefinitely postponed a markup of the bill in January amid the dispute. The Senate Agriculture Committee, which oversees the CFTC, has since advanced its version to the floor.
- Bankers and crypto lobbyists have held multiple closed‑door negotiations in recent weeks trying to find middle ground, but the Banking Committee has not yet updated the formal legislative calendar.
Broader negotiations and outlook
Scott said talks go well beyond stablecoin yield, touching on ethics, decentralized finance carve‑outs, and which entities are included or exempted under the law. “We have made a lot of progress over the last probably 30 days or so,” he added, noting regulators and lawmakers are narrowing differences as momentum builds behind the bill.
House Financial Services chair French Hill has also said the CLARITY Act could help resolve remaining stablecoin and market‑structure questions, underscoring bipartisan interest in moving a framework forward.
What to watch next
- Whether Scott receives the proposed compromise this week and if the Banking Committee schedules a new markup.
- Final language on third‑party stablecoin yields and carve‑outs for DeFi — provisions that could materially shape how banks, exchanges, and crypto platforms compete and operate in the U.S. market.
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