Crypto Regulation Delay Looms as CLARITY Act Faces Uncertain Future

US Senator Cynthia Lummis has issued a warning about the potential delay of the CLARITY Act, a landmark crypto market structure bill. If Congress fails to act before the 2026 election cycle, the legislation may be delayed for up to four years.

The CLARITY Act aims to establish federal regulations for digital assets and has been met with resistance from traditional financial institutions. One of the main points of contention is the bill's provisions on stablecoin rewards, which would ban passive yield or interest paid solely for holding stablecoins but permit activity-based rewards.

The White House Council of Economic Advisers has released a report suggesting that eliminating stablecoin yields would do very little to curb deposit flight and could even lead to a net loss. The report notes that the banking industry's alarm may be exaggerated, and that regular consumers would end up paying more than the banking system actually gains.

Lummis' warning comes as negotiations over the bill continue in Washington, with key disagreements still centered on regulatory jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).