Stablecoin yield standoff could roil crypto markets as French Hill pushes senate

A breakthrough on the CLARITY Act proved elusive as discussions over stablecoin rewards fell behind the White House’s self-imposed March 1, 2026, deadline. Still, traders on prediction platform Polymarket wager a 73% chance that the landmark legislation will be enacted in 2026. 

Speaking at the Milken Institute’s Future of Finance event, House Republican French Hill is urging the Senate to adopt the House-passed CLARITY Act language as a straightforward solution.

In July, the House of Representatives advanced the CLARITY Act (H.R. 3633) by a commanding 294–134 vote, securing strong bipartisan support. Consequently, the strong vote helped raise hope among industry players that the legislation would soon be enacted, increasing pressure on lawmakers to complete the final draft.

Lawmakers have yet to resolve their differences over possible stablecoin yield incentives

Lawmakers in the Senate Banking Committee reached an impasse over whether stablecoin issuers and crypto platforms should be able to offer yield-like benefits to customers. So far, most traditional banks have contended that paying users to hold stablecoins blurs the line with bank deposits and could undermine financial stability, but crypto companies believe participation rewards are key to innovation.

Sharing the concerns voiced by many banks, JPMorgan’s chief financial officer, Jeremy Barnum, addressed the issue on stablecoin yield incentives in January, warning: “The creation of a parallel banking system that sort of has all the features of banking, including something that looks a lot like a deposit that pays interest, without the associated prudential safeguards that have been developed over hundreds of years of bank regulation, is an obviously dangerous and undesirable thing.”

Amid the split between banks, crypto groups, and legislators, White House crypto council executive director Patrick Witt urged lawmakers to resolve their differences by March 1. He warned that any delay beyond the target would only hold back the markup and threaten the bill’s future.

Reportedly, lawmakers have been in constructive discussions over the past few weeks and have tried to craft draft language that would permit modest stablecoin activity-driven incentives while restricting idle yields, but the two sides remain at odds.

Summer Mersinger, CEO of the Blockchain Association, has tried to calm the crypto community over the delays. On X, she emphasized that discussions about the CLARITY Act involve a host of stakeholders and that the legislation, therefore, needs to be deliberated carefully, noting that substantive policy differences take time to resolve.

Senators are still rethinking the markup dates. Nonetheless, if cleared by the committee, the CLARITY Act would proceed to the full Senate.

The crypto community remains optimistic that the bill could be approved in 2026

On prediction platform Kalshi, 41% of traders wagered that the CLARITY Act would be enacted before June, and 15% before May. Overall, 65% believe the legislation will reach the President’s desk before 2027. Meanwhile, 73% of traders on Polymarket are betting that the legislation could be signed into law in 2026.

Additionally, Ripple CEO Brad Garlinghouse told reporters he’s hopeful the CLARITY Act could be approved by April, estimating a 90% probability if talks continue positively. However, some analysts claim the missed March deadline will only add more time to the already stretched legislative schedule, potentially delaying progress until after the November midterms.

The current standstill also follows Coinbase’s withdrawal of support. At the time the exchange pulled its backing, some market observers had cautioned that it could stall any meaningful crypto legislation for the session. Financial policy analyst Jaret Seiberg of TD Cowen had even remarked that the stablecoins’ yield poses risks that could have negative outcomes on the broader crypto market structure bill, “We see this as potentially derailing market structure legislation in this Congress. We view the delay as negative for crypto and positive for banks.”

He added that walking away generally means supporters feel the bill cannot be salvaged through negotiation. Although Coinbase’s Armstrong had justified their decision, saying the draft had “too many issues” for them to back it.

Nevertheless, other crypto players continued their support for the bill even after Coinbase dropped the ball. Ideally, if the bill were approved, oversight of digital assets would be shared by the SEC and CFTC.

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