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US senators are preparing for a significant legislative milestone this week as they move to mark up a major crypto market structure bill. The primary focus of the upcoming sessions revolves around the Digital Asset Market Clarity Act, which introduces specific constraints on how digital asset service providers manage stablecoin holdings. According to the proposed language, these providers would be prohibited from paying any form of interest or yield solely in connection with the holding of a payment stablecoin. This provision represents a key pillar of the bill, aiming to define the operational boundaries of digital assets within the broader financial system.
The markup, scheduled to be held by the Senate Banking Committee on Thursday, is a critical step in advancing the legislation toward a potential floor vote. If successful, the bill would create a comprehensive regulatory framework for both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), specifically for overseeing digital assets. While the bill restricts passive interest on stablecoins, it seeks to provide the clarity that industry participants have long requested regarding the division of labor between federal regulators. This legislative activity follows months of internal debate regarding the classification of digital assets and the specific roles required to maintain market integrity.
Context
The current legislative push is characterized by an attempt to strike a balance between competing interests. Senate lawmakers are navigating the tension between industry demands for yield flexibility and strong resistance from traditional banking groups. These financial institutions have expressed concerns regarding deposit-like competition from digital asset platforms, which has influenced recent legislative history. Banking groups previously lobbied against stablecoin rewards in the GENIUS Act, which was signed into law in July. This historical context underscores the pressure lawmakers face to prevent stablecoins from functioning as direct substitutes for bank deposits without similar regulatory oversight.
To address these concerns while still supporting blockchain utility, the Digital Asset Market Clarity Act specifies conditions under which rewards are still permissible. While simple interest for holding assets is barred, stablecoin rewards would not be prohibited under certain circumstances involving active participation. These include providing liquidity or collateral, as well as engaging in governance, validation, or staking. The bill also allows for rewards tied to other forms of ecosystem participation. By allowing rewards for active utility rather than passive holding, the bill attempts to accommodate the functional requirements of decentralized protocols while placating the banking sector’s resistance to yield-bearing stablecoins.
Impact
The progression of the bill is complicated by internal political demands and varying committee schedules. At least two Senate Democrats have reportedly demanded that the CLARITY Act include robust safeguards to prevent public officials from profiting from investments in digital asset companies. This demand specifically targets officials including US presidents, adding a layer of ethical oversight to the market structure debate. The inclusion of such safeguards is seen by some as a necessary step for securing broader support in a divided legislative environment, though it adds another hurdle to the negotiation process.
Furthermore, the timeline for the bill’s advancement is split across different committees. While the Banking Committee is moving forward with its markup this Thursday, the Senate Agriculture Committee announced on Monday that it would not be considering its version of the bill until the end of January. This staggered approach suggests that a unified version of the legislation may not reach the Senate floor for a full vote in the immediate future. The delay from the Agriculture Committee highlights the complexity of coordinating oversight between different regulatory bodies, particularly when defining the specific jurisdictions of the SEC and the CFTC over the digital asset market.
Outlook
Projections for the final passage and signing of the bill remain varied among experts and government officials. TD Cowen’s Washington Research Group has speculated that the bill is more likely to pass in 2027. This longer-term view suggests that the current session may serve more as a foundational period for establishing the bill’s language rather than a final push for immediate enactment. The group’s analysis indicates that the ultimate fate of the market structure bill may depend on political shifts following future election cycles, as lawmakers weigh the control of Congress.
In contrast, SEC Chair Paul Atkins offered a more accelerated timeline on Monday. Atkins stated that he expected Trump to sign the bill into law by the end of 2026, providing a slightly more optimistic window for industry participants seeking regulatory certainty. Regardless of the exact date of enactment, the bill’s primary objective remains the creation of a definitive regulatory framework for the SEC and CFTC to oversee digital assets. By clarifying the rules of engagement for stablecoins and service providers, the legislation aims to resolve long-standing questions regarding market oversight and the legal status of digital financial instruments in the United States.
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