The American Bankers Association recently walked into the Senate, looked everyone in the eye, and claimed that banks would lose $6.6 trillion if we allowed stablecoins to pay out small returns. Faced with such a terrifying scenario of financial apocalypse, senators pressed the "pause" button one after another.

Task completed. In Washington, D.C., you just need enough rhetoric to ensure the status quo is maintained for the duration of this session. No need to win the argument.

As senators asked questions, the White House released its own report. The results show that the so-called "great deposit migration" of banks... is a bit overkill.

The White House report states that banning stablecoin earnings would increase bank lending by $2.1 billion, or just 0.03% of the total. This little protectionist move will cost consumers about $800 million. The bank's judgment was wrong. What's more, it's costly for the American public. However, the bill has long languished in committee chambers.

The banking lobby knows that the most powerful force in the universe is the senator's desire to go to the beach.

With only a few weeks left before the Senate recesses, lobbyists just need to stall for time. Today, the bill gathers dust in committee rooms, banks freeze deposits, and the rest of us pay for the delay.

Today we’re discussing the final nine weeks of a four-year marathon.

In July 2025, Congress passed the GENIUS Act, which contains two contents: one is to regulate stablecoins, and the other is to prohibit stablecoin issuers from paying interest. This is a huge victory for the banks, as they successfully argued that if people had a choice between a 5% yield on stablecoins and a 0.01% interest rate from banks plus a “free” toaster, the entire global economy would collapse. Congress was afraid of math and immediately signed the bill.

But there is a loophole in the GENIUS Act. While issuers cannot pay interest, their "affiliates" and exchanges can still provide "rewards." Cryptocurrency companies flock to it because they love making money, and banks immediately start snitching because they hate competition.

Next we want to talk about the Clarity Act. This bill, hailed as a "cure-all" bill, aims to plug legal loopholes and ultimately decide whether the U.S. Securities and Exchange Commission (SEC) or the U.S. Commodity Futures Trading Commission (CFTC) will regulate decentralized finance (DeFi). The bill passed the House with an overwhelming 294 votes, with bipartisan support.

The issue was then referred to the Senate Banking Committee, where it eventually became a "permanent lawn ornament."

Everything was in place for a hearing scheduled for January, but Coinbase CEO Brian Armstrong suddenly withdrew his support. He withdrew his support citing "concerns" about DeFi and token restrictions, but primarily because the bill threatens stablecoin rewards, which is Coinbase's cash cow. In essence, Coinbase pockets the interest earned on the government bonds that back these stablecoins, only gives out small "rewards" to users to maintain user loyalty, and keeps the remaining huge profits for itself. This mode of operation is truly wonderful.

A review was originally expected in April, but that plan was blocked after North Carolina Sen. Thom Tillis asked Chairman Tim Scott for more time to negotiate a compromise with banking industry groups. "It's very important to me not to speed up the process," Tillis told reporters. "To listen to all sides and provide them with a reasonable basis for what we will accept and what we will not accept." The North Carolina Bankers Association has been actively communicating with his office for weeks. Senator Tillis represents North Carolina. What a coincidence.

At the Bitcoin 2026 conference two weeks ago, Senator Cynthia Loomis warned that while the Clarity Act was 99% complete, it was in jeopardy. If this year's window is missed, the bill will remain in limbo until the new Congress in 2030 restarts the entire long and arduous legislative process from scratch.

The Senate is currently in recess, which means the earliest possible deliberations will not take place until the week of May 11. And with only nine working weeks left, time is running out. Galaxy Digital currently estimates the probability of approval at 50%, which may still be a relatively optimistic estimate.

Can stablecoins pay out returns? This is a tough question.

The current compromise, brokered by Senators Tillis and Alls Brooks, attempts to be one-size-fits-all on the details. It prohibits "passive income" but allows "activity-based rewards."

Banned: Get paid just for holding stablecoins (too much like a bank account)

Allowed: Get paid for using cryptocurrencies (“credit card points” for cryptocurrencies)

But no one has been able to find a definition that satisfies both bankers and the cryptocurrency community. This ambiguity is a godsend for the banking lobby. Every week wasted arguing about semantics brings us closer to the August recess. The White House has stopped pretending to be neutral. An analysis released by the Council of Economic Advisers in April said the bank's argument was wrong. Patrick Vitter of the White House Cryptocurrency Council described the pressure on banks as “greed or misunderstanding,” without specifying which.

The cryptocurrency industry has historically failed to defend itself well. In January, Coinbase’s Brian Armstrong withdrew his support for cryptocurrencies, giving all the Democrats who were looking for a reason to vote against it a perfect excuse.

Now that David Sachs has moved into a broader advisory role, the responsibility falls on Patrick Vitter and the White House Encryption Council. They are trying to maintain optimism, claiming the delay is just an opportunity to "resolve differences" and that we are "closer than ever". Although these words are beautiful, they ignore the fact that in politics, even if you are standing at the finish line, if the time is up, everything is meaningless.

Meanwhile, the market continues to develop without any permission. Morgan Stanley launched MSNXX, a money market fund created specifically to manage stablecoin reserves under the GENIUS Act. Coinbase has launched CUSHY, a stablecoin credit fund whose shares are held in tokenized form. Agora is applying for a banking license. Products are launched with strings attached, compliance teams are constantly adding restrictions, and innovation emerges not from clear rules but from uncertainty.

The deposit threat, which banks have lobbied hard against, appears to be unaffected by the lobbying. Standard Chartered predicts that banks could lose $1.5 trillion in deposits to stablecoins by 2028, regardless of whether gains are allowed.

Senator Allsbrooks' pledge of "national discontent" in March was intended to signal a breakthrough. But in a Senate currently on recess, a compromise that displeases everyone is often just an excuse for inaction.

The yield ban may slow down capital flows, but no amount of lobbying will solve the problems with the product itself. For example, the 4.5 percentage point gap between savings account yields and stablecoin yields is a case in point.

If the CLARITY Act dies this summer, the next Congress will start from scratch in 2027. By then, new bills will be drafted, negotiated, and lobbied against, and review procedures will be scheduled, rescheduled, and postponed again. Come 2030, the bank asks for more time. Senator Tillis, or his successor, says it's important not to rush things.

The stablecoin industry will then be larger, less regulated, and less interested in seeking permission.