A Reuters report published Thursday suggests the long-awaited crypto market structure bill, known as the CLARITY Act, may not become law in 2026. This uncertainty stems from growing opposition from the banking sector, particularly over key rules for regulating stablecoins.
The legislation has hit a new impasse after banks rejected a compromise proposal from the White House. This breakdown raises serious doubts about whether Congress can advance the bill before the midterm election season limits the available legislative time.
Banks oppose provisions that would allow stablecoin issuers and other crypto companies to offer interest-bearing products and customer rewards. They argue these incentives could draw deposits away from traditional banks, making it harder for them to fund loans and support credit creation.
Crypto companies counter that the ability to offer rewards is essential for attracting users and staying competitive. They view a prohibition as an anti-competitive measure designed to protect established banks.
Last month, the White House intervened to broker a compromise, proposing to allow stablecoin rewards in limited cases—such as for peer-to-peer payments—while banning rewards on idle balances. According to four people familiar with the talks, this aimed to balance innovation with deposit stability. While crypto firms have reportedly accepted this deal, banks have indicated they still cannot support it.
Banking sources told Reuters that lenders want much stricter limits on which activities qualify for rewards. A senior White House official noted banks remain worried that even the narrower framework could speed up the outflow of deposits. A banking industry source added that some lenders believe the permitted activities would still significantly weaken their deposit bases.
Several senators are said to support the banking sector’s stance, and industry representatives believe they may secure more favorable terms with that political backing.
Beyond the stablecoin issue, the bill faces other political challenges, including disagreements over ethics and illicit finance provisions.
Time is also a major hurdle. The Senate has limited floor time, especially as lawmakers prepare to leave Washington for the summer to campaign for the midterms. Adrian Wall, managing director of the pro-crypto Digital Sovereignty Alliance, said the window for passing the bill is closing fast. He argued that if the bill isn’t sent to the President by July, it will be very difficult to regain momentum before the elections.
The political landscape could become even less favorable after November. If Democrats gain seats in Congress, the chances of passing crypto-friendly legislation could shrink further.
Geopolitical events are adding to the uncertainty. According to Brian Gardner, chief Washington strategist at Stifel, the conflict in the Middle East is making it harder for Congress to focus on crypto regulation this year. In a note published Tuesday, Gardner wrote that the legislative calendar is increasingly working against the bill, stating, “The calendar is becoming the enemy of this bill.”
Frequently Asked Questions
FAQs Bank Opposition the Crypto Market Structure Bill
BeginnerLevel Questions
1 What is this Crypto Market Structure Bill I keep hearing about
Its a proposed law in the US Congress that aims to create clear rules for the cryptocurrency industry Its main goal is to define which government agencies regulate different crypto assets and exchanges providing legal clarity that the industry currently lacks
2 Why are banks opposing this bill
Major banking trade groups argue that the bill as written could create risky loopholes Their main concern is that it might allow crypto companies to operate like banks without being subject to the same strict capital consumer protection and antimoney laundering rules that traditional banks must follow
3 What does 2026 passage refer to Why is that date important
2026 passage refers to the next realistic chance for the bill to become law The current congressional session ends in early 2025 Given the complexity of the issue and the strong opposition analysts believe the process will need to restart with a new Congress in 2025 pushing any potential vote into 2026 at the earliest
4 How does this affect me as someone who owns some crypto
In the short term probably not much The immediate impact is political and procedural However in the long run the outcome of this fight will determine whether the US has clear consistent rules for crypto exchanges and tokens which affects their legality stability and how safely you can trade and store your assets
Advanced Practical Questions
5 What specific changes are banks demanding in the bill
Banks are primarily demanding that any entity performing banklike functionsparticularly taking custody of customer crypto assetsbe required to become a federally insured bank or be a subsidiary of one This would subject them to the full suite of banking regulations they believe are necessary for financial stability
6 Isnt the point of crypto to operate outside the traditional banking system Isnt this opposition expected
Yes this tension is central to the debate Many crypto projects were founded on a philosophy of decentralization and disintermediation Banks see their role as essential for security and stability