The window to pass the most important crypto law in U.S. history is quickly closing. If Congress fails to pass the CLARITY Act by the end of April, the effort will likely stall until after the midterm elections. For retail investors, this means another year of guessing which tokens the SEC might sue.
Lawmakers are currently deadlocked on a single, specific question: how much money stablecoins are allowed to pay you. This is a technical fight with massive consequences.
(SOURCE: TradingView)
If lawmakers miss this spring window, the bill will fall victim to the election cycle, leaving the industry stuck in a regulatory limbo indefinitely.
This latest CLARITY Act update comes as the crypto market is stable over the past 24 hours, with a total market cap of over $2.6 trillion and $91 billion in daily trading volume.
CLARITY Act Update: The Mechanism of Section 404
TODAY: Senate Banking Committee meets on CLARITY Act
Regulatory clarity is getting closer and closer…
And when this clarity is achieved, XRP will be the asset that benefits the most. And a major bull cycle will begin for all cryptocurrencies.
Mega bull– Bitcoin Professor (@Bitcoinprof0637) March 17, 2026
TODAY: Senate Banking Committee meets on CLARITY Act 
The CLARITY Act is an attempt to finally decide who runs the crypto show: the Commodities Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC).
For years, these agencies have been engaged in a turf war. The CLARITY Act would give the CFTC exclusive jurisdiction over “digital commodities” spot markets. This is important because the CFTC is generally considered a more pragmatic regulator than the oversight-heavy SEC.
But the entire bill is blocked because of one specific clause: Section 404. This section deals with “stable coin yield.” To understand this struggle, you have to look at it from a bank’s perspective.
If a stablecoin issuer like Circle or Tether holds your dollars and pays you 5% interest (or “rewards”), it is effectively acting like a savings account. But unlike a bank, they don’t have to pay expensive FDIC insurance or comply with strict capital requirements.
The mechanism of the current bill is obscure. Section 404 attempts to distinguish between “interests” and “loyalty benefits.” The banking lobby says this is a loophole that allows crypto companies to eat their lunch.
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The midterm deadline: why the clock matters
In Washington, DC, timing is the enemy. We are not just waiting for a revision of the text. We are running against election season. Political analysts view late April or early May as the deadline. Here’s why:
Once summer arrives, lawmakers leave Washington to campaign for the midterm elections. Legislative activity is at a standstill. Controversial bills, and crypto is definitely controversial, are the first to go. A bill that does not pass the Senate Banking Committee by May is effectively dead until Congress next meets in 2027.
There’s little chance of a “lame duck” session occurring after the November election, but relying on it is a gamble. The current Senate plan for the CLARITY Act has already stalled once. If negotiations between bank lobbyists and crypto proponents do not result in a compromise in the coming weeks, the momentum will die.
Who is fighting for this and what will come next?
After seeing $CRCL and a bunch of other crypto stocks for a while on the CLARITY Act news, I couldn’t help but share my thoughts. Everyone wants a piece of the pie in this stablecoin world! The big step forward is section 404 of the CLARITY law: it finally prohibits liabilities…
— UI C
T (@shihchiehlee) The battle lines are drawn between traditional finance and the crypto industry, with Congress stuck in the middle.
On the one hand, there is the banking lobby. They argue that if it looks like a bank account and pays interest like one, it should be regulated as such. They want Section 404 to strictly prohibit stablecoin issuers from paying a yield.
On the other hand, stablecoin issuers and DeFi protocols argue that “rewards” for staking or holding are fundamentally different from banking interests. They warn that banning yield would drive innovation overseas, leaving the United States behind.
Leaders of the Senate Banking Committee are trying to find a middle ground in which intermediaries (such as exchanges) could manage awards rather than issuers directly. But the Congressional Research Service notes that current plans leave the definition of “incumbent” too vague to satisfy banks.
We are expecting a committee marking schedule in mid-April. If this date passes without a hearing, you can assume that the CLARITY Act is on hold until after the election. The bill must pass now, otherwise it won’t move at all.
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The article Congress Faces Deadline to Advance Crypto CLARITY Act Before Midterms appeared first on 99Bitcoins.
