Wall Street Breaks With Banks on CLARITY Act Yield

Retail banks and major trade groups oppose the CLARITY Act’s compromise on stablecoin yield, while Goldman Sachs, Morgan Stanley and BNY have signaled support as the Senate prepares to mark up the bill this month.

The split lines up with firms’ business models. Lenders with large consumer deposits say dollar-pegged tokens that pay yield could pull funds from traditional deposit accounts. Firms with limited retail exposure see the compromise as a legal path to expand crypto trading, staking and lending under bank rules.

Senators Thom Tillis and Angela Alsobrooks released compromise language last week intended to address those concerns. Several large financial institutions have privately indicated support for that language, according to industry observers.

For Goldman, Morgan Stanley and BNY, the bill would clarify authority under the Bank Holding Company Act to engage in a range of crypto activities and would set a framework for portfolio margining. Backers say those changes would let banks offer digital-asset services within existing regulatory structures.

A coalition of community and retail-focused groups, including the Bank Policy Institute, the American Bankers Association and the Independent Community Bankers of America, issued a joint statement saying the compromise “falls short” of plainly banning yield on stablecoins. They argued crypto firms could design products that produce outcomes similar to interest-bearing deposit accounts, creating competitive and safety concerns for smaller banks.

On social media, Sen. Thom Tillis wrote that some in the banking industry “may not want either of these things to happen, we respectfully agree to disagree.” At a financial conference, Sen. Kirsten Gillibrand said Democratic support is conditional on an ethics provision and warned, “There will be no one voting for this bill if we don’t have an ethics provision.” She urged negotiators to resolve ethics, consumer-protection and illicit-finance language within a week to keep the bill on schedule for a possible August vote.

Industry figures have highlighted the political calendar as a risk to the bill. Alex Thorn of Galaxy Digital noted a competitive Senate race could change committee leadership and make passage harder. Ripple CEO Brad Garlinghouse warned the bill’s prospects could decline sharply if debate stretches into the midterm campaign season.

Prediction markets and some observers have placed higher odds on the CLARITY Act becoming law this year after recent endorsements from large firms and the release of compromise language. The Senate markup will test whether the remaining policy fixes and those endorsements are enough to bridge the divide between retail banks and Wall Street.