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By putting the Digital Asset Market Clarity Act of 2025 (CLARITY Act) on hold, lawmakers have reinforced the constraints on traditional financial institutions’ participation in the crypto-asset space.
Although the act passed the House of Representatives with bipartisan support in July 2025, its path through the Senate has encountered several significant obstacles.
A major point of contention involves an amendment to the related Guiding and Establishing National Innovation for US Stablecoins Act of 2025 (GENIUS Act) that would prohibit platforms from paying interest to stablecoin holders.
Traditional banks are concerned that stablecoin yields could cause deposits to leave the banking system, creating systemic risk. Conversely, crypto firms argue that such limitations would make US companies less competitive globally.
More fundamentally, the dispute reflects an unresolved policy question over where yield-bearing stablecoins should sit on the spectrum between payment instruments and investment products.
In addition, lawmakers are split on whether the bill should include specific language addressing official conflicts of interest, particularly those perceived to relate to President Trump’s family’s ties to the crypto sector.
Although not central to the bill’s substance, these concerns have complicated coalition-building and increased amendment pressure.
Most recently, a critical markup session scheduled for January 14, 2026, was postponed because lawmakers had introduced more than 100 proposed amendments.
Senator Tim Scott (R-SC), chair of the Senate Banking Committee, opted to postpone the vote rather than risk the bill’s failure due to the contentious nature of these additions.
As a result, and amid a shift in legislative focus towards housing, further markup in the Senate Banking Committee is unlikely before late February or March 2026.
Building on the GENIUS Act
The CLARITY Act is intended to build on the GENIUS Act, using it as a foundational pillar for a broader regulatory framework.
Where the GENIUS Act focused specifically on the issuance and oversight of stablecoins, the CLARITY Act is designed to take the next step by classifying and overseeing digital assets more broadly.
In particular, lawmakers aim to bridge the gap between legacy finance and blockchain technology by clarifying the legal authority of traditional banks to engage with digital assets.
For payments firms, the legal clarity the act is intended to deliver could provide the same kind of impetus for the wider digital asset market that the GENIUS Act has provided for stablecoins.
This is especially the case for bank-led or cross-border payment use cases, where legal certainty is a prerequisite for commercial deployment.
The CLARITY Act introduces a distinct legal category for permitted payment stablecoins, which are specifically designed as a means of payment or settlement.
It specifies that these assets must be denominated in a national currency, issued by entities subject to state or federal banking supervision and redeemable at a fixed monetary value.
It also explicitly states that a national bank may use a digital asset or blockchain system to perform or deliver any activity or service it is already authorised by law to provide, a key step in the mainstreaming of crypto.
Another notable provision reinforces the existing ban on the development of central bank digital currencies (CBDCs) by US authorities at any level, reflecting efforts by some lawmakers to limit the Federal Reserve’s role in the digital payments landscape.
The CLARITY Act also introduces a new category of commodity-backed payment stablecoins, permitting issuance denominated in highly liquid physical commodities such as gold, provided they are fully backed by custody-held reserves.
It clarifies that these commodity-backed assets are not to be considered investment companies or commodity pools, but are subject to state and federal oversight.
Collectively, these provisions could create both opportunities and challenges for payments firms operating in the US, making the legislative delay a source of frustration across the sector.
It is also worth noting that the delay introduces the possibility that the legislation may never be enacted – if it cannot progress through the Senate before the November 2026 mid-term elections, there is a risk it will be delayed until 2027 or 2028, or dropped altogether if policy priorities change.
The impact of the delay
The primary impact of the delay is that payments firms must continue to operate within a fragmented and often contradictory regulatory landscape.
Traditional banks and financial institutions that would like to enter the payments and digital asset space under conditions of regulatory clarity are particularly affected by the legislative standstill.
Legal uncertainty has historically constrained the participation of such organisations in the crypto-asset space, and the lack of resolution prolongs this situation.
Unless and until the CLARITY Act provides explicit authority, national banks remain without a clear, codified right to use blockchain systems for authorised activities such as settlement beyond limited or experimental implementations.
Without the statutory definitions provided by the act, firms remain in a legal grey zone, often unsure whether their digital asset products or services fall under securities or commodities laws.
In addition, the absence of a unified framework risks perpetuating regulation by enforcement, with rules emerging through ad hoc litigation rather than clear legislative guidance. Even if enforcement activity temporarily slows, this risk remains structural in the absence of statutory clarity.
The retrenchment by federal regulators such as the Consumer Financial Protection Bureau (CFPB) under the second Trump administration partially mitigates this risk, but only a defined statutory regime would materially alter the regulatory calculus.
The lack of a coherent regulatory framework may also hinder market growth and slow the development of new payment technologies.
Title V of the CLARITY Act focuses on innovation and technology improvements, requiring the Secretary of the Treasury to study the potential for blockchain technology to address payment fraud, costs, settlement times and automated payments.
These developments, which will clearly be of interest to payments organisations, will be on hold until the act continues its legislative journey later in the year.
US leadership
The delay could also weaken the US’s position as a leader in financial technology and especially digital assets, which the GENIUS Act helped to maintain.
Retaining the existing regulatory patchwork could lead organisations that had been planning to enter the US to consider focusing on jurisdictions with more tailored crypto market regulations, even if the depth of the US market continues to act as a countervailing pull.
Unless the CLARITY Act recovers momentum in the Senate, it could become a missed opportunity to provide the regulatory certainty that both traditional financial institutions and digital asset firms have long sought.
In the interim, payments firms must continue to navigate legal ambiguity, constrained innovation and strategic hesitation.
Whether US lawmakers can resolve their differences and advance a durable framework before electoral timelines intervene will be critical in determining the country’s long-term position in the digital payments and digital asset ecosystem.
