Home / The GENIUS Act, the Clarity Act & the Bank-vs-Crypto Fight

Cryptocurrency Regulation

Updated July 2026 23 primary sources

Congress has spent 2025–2026 writing the first comprehensive federal rules for crypto — the GENIUS Act became law in July 2025 to regulate "stablecoins," and the CLARITY Act is working through the Senate to decide which agency oversees the rest of the crypto market — while a separate, high-stakes fight over whether stablecoins can pay interest has pitted the banking industry against the crypto industry and the White House (The Block; CNBC).

  • The GENIUS Act created the first federal stablecoin framework — Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act into law on July 18, 2025, establishing federal oversight for "payment stablecoins" (crypto tokens pegged to the dollar) and explicitly barring stablecoin issuers from paying interest or yield to holders (White House fact sheet; CoinGecko).
  • The CLARITY Act would decide who regulates the rest of the crypto market — The Digital Asset Market Clarity Act passed the House 294–134 in July 2025 with support from 78 Democrats, and cleared the Senate Banking Committee 15–9 in May 2026 with two Democratic votes; it would split jurisdiction between the SEC (assets that function as securities) and the CFTC (assets that function as "digital commodities") (The Hill; CNBC).
  • A loophole in the GENIUS Act is now the center of the fight — While stablecoin issuers themselves can't pay yield, crypto exchanges like Coinbase and Kraken can offer 3.5%–5% "rewards" on stablecoin holdings through a different legal structure, far above the near-zero interest banks pay on deposits, and closing or protecting that loophole has become the main obstacle to passing the CLARITY Act (CoinGecko; crypto.news).
  • The White House has taken the crypto industry's side against the banks — In April 2026, the White House Council of Economic Advisers released a report backing yield-bearing stablecoins and disputing bank claims that it would hurt community lending, putting the administration at odds with the banking lobby on the CLARITY Act's central sticking point (New York Times; CNBC).
The Two Positions

Where each side stands

Every point below is sourced to a real organization, official, or news report — click through to read it in full context.

Conservative

Supporters call the GENIUS Act a landmark that finally brings clear rules to a "grey area"

The Senate Banking Committee's own "Myth vs. Fact" release argued that without the law, stablecoins had few consumer protections, no national-security safeguards against illicit finance, and no limits on Big Tech issuing its own currency, and that the bill fixes all three (Senate Banking Committee).

The CLARITY Act is framed as ending years of regulatory uncertainty that pushed innovation offshore

Proponents say the bill is the most comprehensive digital-asset legislation to ever pass a chamber of Congress, and that clear SEC/CFTC jurisdiction lines will let American exchanges and builders compete instead of operating in legal limbo (FinTech Weekly; Latham & Watkins crypto tracker).

The Trump administration argues banning stablecoin yield protects consumers and competition, not banks

The White House's Council of Economic Advisers concluded that banning stablecoin interest would raise bank lending by only about $2.1 billion — roughly 0.02% of a $12 trillion loan book — suggesting the banks' financial-stability argument is overstated relative to the benefit consumers get from earning yield (Bitcoin Magazine).

The crypto industry says it's defending consumer choice against an entrenched banking monopoly

A coalition of more than 125 crypto companies and advocacy groups, including Coinbase, Gemini, and Kraken, publicly rejected the bank lobby's push to ban stablecoin rewards, framing the fight as banks trying to use Washington to protect near-zero deposit rates from real competition (Yahoo Finance/CoinDesk; crypto.news).

Bipartisan Senate support is cited as proof the framework is reasonable, not a giveaway

Senate Banking Chair Tim Scott and Democratic Sens. Ruben Gallego and Angela Alsobrooks backed the CLARITY Act's advancement out of committee, which supporters point to as evidence the bill's core market-structure framework has support beyond one party (CNBC).

Progressive

Consumer advocates say the GENIUS Act was written too weak to actually protect people

Consumer Reports urged lawmakers to oppose the bill unless strengthened, warning it "fails to protect consumers" from the real risks of a new financial product being marketed as a safe cash substitute (Consumer Reports).

Financial-reform groups argue the bill leaves the door open to a financial-stability crisis

Better Markets and the Senate Banking Committee's own minority analysis concluded the GENIUS Act's late changes were "cosmetic," that a weakened Consumer Financial Protection Bureau would have less authority over stablecoins than it has over other payments today, and that the bill "is worse than no bill at all" as written (Better Markets; Senate Banking Committee minority analysis).

A separate consumer-policy analysis found real risk in mainstreaming stablecoins

A report from the Consumer Federation of America-affiliated Consumer Policy Center concluded that even after GENIUS Act passage, payment stablecoins remain riskier and potentially more expensive than existing consumer payment options, and that ordinary users need clearer disclosures before adopting them at scale (Consumer Policy Center).

Senate Democrats blocked a faster path for the CLARITY Act over conflict-of-interest and consumer-protection gaps

When the bill first passed the House, Senate Democrats raised concerns it lacked adequate consumer safeguards and could directly benefit President Trump's personal crypto ventures, which by mid-2026 had generated him more than $1 billion in reported income while his administration set crypto policy (Blockworks; The Guardian).

Some progressives side with bank regulators' financial-stability warnings on yield

Critics note the Federal Reserve has warned that a rapid shift of deposits into yield-bearing stablecoins could squeeze more than a trillion dollars out of local mortgage and small-business lending, an argument that lines up with the banking lobby's position even though it's usually progressives who are skeptical of bank-lobby arguments (CoinGecko).

Watchdogs argue the president's personal financial stake makes neutral regulation impossible

With Trump's family reportedly earning over $1 billion from crypto ventures in 2025, including a $500 million investment from a UAE-linked fund, critics say any administration position on crypto rules — including its stance favoring the industry in the stablecoin-yield fight — is compromised by direct personal profit (The Guardian).

Common Ground

Key facts both sides cite

Data and polling that inform the debate — both camps draw on these figures, even when they read them differently.

The GENIUS Act is law; the CLARITY Act is not — GENIUS was signed on July 18, 2025, while CLARITY passed the House in July 2025 (294–134) and cleared the Senate Banking Committee 15–9 in May 2026 but had not passed the full Senate or become law as of mid-2026, needing merged Banking and Agriculture Committee text before any floor vote (The Block; crypto.news).

The core legal dispute is narrow but the stakes are large — Both sides agree the fight centers on whether stablecoin holders can earn yield, with the American Bankers Association warning that up to $6.6 trillion in bank deposits could be at risk of migrating to yield-bearing stablecoins, while crypto firms and the White House dispute how large the real-world lending impact would be (Cointelegraph; CoinGecko).

Five major bank trade groups are jointly lobbying against the current CLARITY Act yield language — The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America issued a joint statement rejecting a bipartisan Senate compromise (the Tillis-Alsobrooks language) on stablecoin yield restrictions, objecting specifically to Section 404 of the bill (Binance Square).

The CLARITY Act vote pattern has been genuinely bipartisan, not a clean party split — 78 House Democrats joined all Republicans to pass CLARITY in the House, and Democratic Sens. Ruben Gallego and Angela Alsobrooks voted with Republicans to advance it out of the Senate Banking Committee, even as most Senate Democrats raised concerns about the bill's consumer protections (The Hill; CNBC).

Sources

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