CLARITY’s delay to test Wall Street’s $6.6 trillion stablecoin warning which is at odds with White House view

The CLARITY Act has stalled in Senate Banking deliberations, setting back an array of market rules that would solidify into law most of the pro-crypto stance that took hold in the President Donald Trump administration. Yet, Congress may have handed crypto markets an unexpected experiment. Galaxy Research puts the odds of enactment this year at roughly 50-50, possibly lower, with unresolved disputes over DeFi provisions, jurisdiction, and stablecoin yield language. The bill spans token classification, exchange and broker-dealer registration, software carveouts, and DeFi provisions, with the rewards dispute representing one contested layer inside a much larger framework. On the rewards layer is where Wall Street's most concrete stablecoin-related fear lives, and a stall could let the market answer it before Congress does. The rewards lane The GENIUS Act explicitly bars stablecoin issuers from paying interest or yield solely for holding a payment stablecoin, resolving the simplest version of the fight. The harder question is if exchanges and third parties can offer cash back, referral bonuses, or promotional yields without running into the same prohibition. Both the OCC's March proposal and the FDIC's April proposal extended anti-evasion presumptions to some affiliate and related third-party arrangements, narrowing the lane. Yet, both documents are still proposed rules pending finalization, and regulators are still defining the practical scope of what counts as prohibited. Banks have framed this open perimeter as an existential threat to their competitiveness. The ABA's community bank letter cited up to $6.6 trillion in deposits as potentially at risk, warning that exchange-funded inducements could pull savings out of the banking system. Standard Chartered put a more bounded forecast of up to $500 billion in deposit outflows to stablecoins by the end of 2028, with regional banks carrying the most exposure. The argument centers on exchange-funded rewards that make stablecoin balances functionally competitive with bank deposits while avoiding the reserve requirements, capital rules, and insurance costs that banks bear. The White House Council of Economic Advisers published a direct rebuttal in April, finding that eliminating stablecoin yield would increase bank lending by about $2.1 billion , or roughly 0.02%, and impose an $800 million net welfare cost. The stablecoin market stood at over $320 billion as of Apr. 27, against roughly $19.1 trillion in US commercial bank deposits. At about 1.66% of the deposit base, stablecoins are large enough to generate competitive friction at the margins and small enough for the system's aggregate funding to hold. A bar chart shows the stablecoin market at over $320 billion represents roughly 1.66% of the $19.1 trillion US commercial bank deposit base. If the stablecoin market grew from $320 billion to $500 billion and every incremental dollar came from bank deposits, the displacement would be roughly 0.96% of current deposits. The amount is enough to test community institutions' pricing power while leaving the system's aggregate funding intact. The positive outcome If CLARITY stalls and agency rulemaking does not close the rewards lane, exchanges can keep operating in the unsettled perimeter. In that environment, the rewards market runs long enough to generate observable data, such as flows between bank accounts and on-chain balances, moves in retail cash allocation, and competitive responses from banks on deposit rates. Congressional hearings have spent eighteen months generating arguments, and a legislative delay could generate evidence. The difference between the ABA's $6.6 trillion alarm and the CEA's $2.1 billion lending effect would begin to fill in with actual data. The global dimension makes any data that emerges immediately relevant beyond US borders. MiCA explicitly bars issuers of e-money tokens from paying interest and extends that restriction to crypto-asset service providers. Hong Kong runs a license-based stablecoin-issuer regime. The BIS noted in April that the main cross-jurisdiction split now centers on whether exchanges and CASPs may offer rewards, with some markets prohibiting them, others restricting retail access, and others leaving no explicit ban. A BIS working paper published in February found that a $3.5 billion five-day inflow of stablecoins lowers 3-month T-bill yields by 2.5 to 3.5 basis points, providing evidence that stablecoins already connect to the front end of the Treasury curve in measurable ways. If the US gray area produces deposit-flow data, it becomes the first empirical input into an international policy debate that has run entirely on projections. Claim / source What they argue Magnitude cited What a live market test would show ABA / banks Rewards could drain deposits from banks Up to $6.6T at risk Whether deposit outflows actually appear at scale Standard Chartered Stablecoins could pull meaningful deposits by 2028 Up to $500B Which