Stablecoin Yield Clash Sends CLARITY Act Odds From 72% to 42%

Market confidence in the CLARITY Act cratered this week, with Polymarket odds for the bill’s passage plunging from 72% to 42% in a single day — a stark signal that traders now see a real chance the legislation could stall or fail. Why the sudden wobble? The White House convened its third round of crypto talks at ETHDenver, where negotiators reported progress but also revealed the core sticking point: whether stablecoins can offer high yields. Patrick Witt of the White House Crypto Council told attendees the gap between the industry and banking groups has “shrunk considerably” after a private meeting last week, and a tentative “compromise” is beginning to take shape. Still, the disagreement runs deep. Two camps are at odds: - Crypto firms — represented by Coinbase, Ripple and Andreessen Horowitz — want stablecoins to retain features like programmability and the ability to offer rewards or yield. - Banking groups — including the American Bankers Association and the Bank Policy Institute — are pushing to protect the traditional banking system, warning that attractive yields on stablecoins could prompt mass outflows from banks and destabilize financial institutions. Crypto advocates counter that restricting yield is an anti-competitive move that would give banks outsized control over consumer savings and stifle innovation. The White House has taken direct control of the drafting process and set a hard March 1 deadline: finalize the bill by then, or risk the negotiations collapsing. The latest draft reportedly tightens loopholes — including measures to treat any disguised interest as regulated yield. Companies that try to label interest as “rewards” could face enforcement from the SEC, Treasury and CFTC and fines up to $500,000 per day, signaling an administration preference for strict oversight and closer alignment of stablecoins with the banking system. But the bill’s fate turns on politics as much as policy. Senator Tim Scott still has not rescheduled a pivotal meeting, and without his engagement the CLARITY Act could remain deadlocked. “I believe if we solve this, it’s going to start a domino effect here, and I think things could move pretty fast once it’s resolved,” Witt said. Not everyone is convinced: market commentator Dan Gambardello wrote, “Seems like they’re just playing games…” Market signals reflect that uncertainty. Beyond Polymarket’s sharp odds drop, on-chain and sentiment analytics provider Santiment flagged growing expectation that the bill may stall or collapse. Still, some industry leaders remain optimistic — Ripple CEO Brad Garlinghouse said on Feb. 20 he thinks the bill could pass as early as April — and several voices in the sector continue to push for a deal. For now, the crypto community and investors are watching Washington nervously. The CLARITY Act could finally deliver long-awaited regulatory certainty — or it could become another casualty of competing priorities in D.C. Disclaimer: This article is informational and not investment advice. Cryptocurrency trading and investing carry significant risk; readers should do their own research before making decisions. Sources: Kenny Nguyen/X, Dan Gambardello/X, Santiment/X, Satoshi Flipper/X. © 2026 AMBCrypto Read more AI-generated news on: undefined/news