🫣 The CLARITY Act has momentum. Washington might still kill it

Clarity ACT had its biggest week, but it still might not make it.

Something broke loose on Friday that the crypto industry had been waiting months for.

Senators Thom Tillis and Angela Alsobrooks released the long-awaited stablecoin yield compromise text for the CLARITY Act.

Tillis has been one of the bill's most vocal internal critics, and told reporters he is tired of waiting. "I'm going to ask my chair when we come back to go ahead and schedule markup," he said. "I feel like we've come a long way. We need to put that before committee and get it moving. Return of the Senate from recess on May 11 Markup that week would represent the final pragmatic shot ahead of Congress' return from a Memorial Day recess May 21.

There are only eleven weeks of Senate floor time left before campaign season for the midterm effectively ends the legislative session. The bill has been pending since July of 2025.

The actual content of the stablecoin compromise

The yield was always the fight we were up against. Banks have spent months making the pitch that stablecoins paying interest would siphon billions out of traditional deposits, luring customers onto crypto platforms and away from the checking accounts that supply their lending operations.

By 2028 Standard Chartered estimated that between $300,000 million to $500,000 million US domiciled bank deposits could be diverted to stablecoins. Summary Many banks called for a level 2: hard stablecoin yield ban. The crypto industry wanted to give rewards for people to use their services.

One downside of the Tillis-Alsobrooks compromise is that it does approximate a particular middle ground. While businesses will become legal, crypto firms will still be unable to yield on stablecoin balances if that yield has the functional equivalent of a bank deposit paying interest.

No more passive returns for simply holding a stablecoin.

However, activity-based rewards, paying users to transact or trade with the stablecoin, or use it in workflows, are still allowed. It compels the crypto firms to leave the buy and hold and earn’s model toward a buy and use one.

Crypto Council for Innovation expressed concerns that the ban exceeds its mandate since it applies to every digital asset market participant, as opposed to merely stablecoin issuers. It endorsed the deal anyway. The industries' reading: a flawed bill that advances is better than a perfect bill that never comes up for a vote.

That didn't stop the fight

There were other roadblocks for the bill but two major issues are still alive, however.

The first is ethics.

The other thing we have understood is that the Democrats are now pressuring more stringent language to ensure senior government officials can't benefit from crypto businesses once in office. The objective is obvious: Trump's family has made more than $1.4 billion in crypto projects like World Liberty Financial and the USD1 stablecoin.

Senator Ruben Gallego said without bipartisan agreement on ethics, there is "no final bill, no final movement." Tillis has said that he agrees the language must be included. The compromise proposed, placing the ethics provisions on the Senate floor as opposed to including them in committee, eliminates one hurdle from the markup, but retreats a politically fraught confrontation to later in the campaign season.

The second is DeFi.

It is the Blockchain Regulatory Certainty Act's language that would protect software developers from criminal liability under an antiquated money transmitter law stemming back to 1960. It concerns law enforcement groups, who say it can create blind spots in their investigations. There could be another procedural delay because Sen. Chuck Grassley, chairman of the Judiciary Committee, said he wants those provisions to go through his committee before the bill moves forward.

The most difficult part is the math of the vote

The bill then requires 60 votes on the Senate floor, even if the markup occurs May 11 and heads to committee unscathed. Which would need united Republican support and at least seven or eight bipartisan votes. The effective Republican backing therefore stands at 52, so and John Kennedy has already indicated – since its claimed a boon for America – he won't back it. That increases the Democratic number from seven to eight.

Polymarket now prices 2026 passage at 46%, a week ago on the stablecoin news this was up from just 38%, but still lower than the February highs of nearly 80%. The probability is 50–50 or lower if you ask Galaxy Digital research head Alex Thorn citing five consecutive obstacles even beyond a successful markup: full Senate floor vote, reconciliation with the separate version of the bill from the Senate Agriculture Committee, reconciliation to July 2025 House text and a presidential signature.

Over the weekend, Trump told memecoin holders at Mar-a-Lago that he wants the bill passed on, and will sign it as soon as it hits his desk. So that alleviates the concern with the last step. In the entire challenge, the first four steps account for less than 11 weeks of available Senate floor time.

The stakes are clear, as summarized well by digital policy analyst Adrian Wall: If this doesn't pass and hit the President's desk by July I think everyone will feel that window closed with the mid-terms

The stablecoin fight is over. The bill has a date. The only question remaining is whether that will be sufficient to clear the five hurdles faced in eleven weeks.

BTC reversed some of the deep losses from February and moved up to $76,960.11 in early May. The coin has accrued 12.94% in gains for Q2 to date, leading to more bullish expectations of a price reversal.

The Fed recently singled out Anthropic's Mythos by name in a regulatory warning about AI risks to banks.

In a Financial Stability Oversight Council roundtable on Thursday, Fed Vice Chair Michelle Bowman said what most are only silently thinking.

Attackers can use the same AI tools used by banks to find vulnerabilities in their systems. For example Mythos, "an indication of how rapidly capabilities can evolve," she said. Currently the Fed, OCC and FDIC are working together to issue guidance for banks who want to adopt AI in a more responsible way.

It is more supervisory than prescriptive, affording banks leeway and regulators time to catch up. The broader policy angle alluded to here is that the Pentagon has recently identified Anthropic as a supply-chain risk, while the White House is at the same time writing up guidance to allow federal agencies to continue working with Mythos.

It was coordinating, not fragmenting that Bowman told the financial system. What the financial system is really hearing is: the government can't decide whether its most powerful A.I. tool convicts or exonerates.

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