The United States Senate has moved the crypto Clarity Act to the back of its schedule, slowing an important agreement between the crypto industry and the banking lobby over whether stablecoins can yield returns to investors.

That agreement is embedded in the legislation. Banks have spent months negotiating to prevent stablecoin issuers from offering interest-like returns on stablecoins, arguing that such products could draw deposits away from banks.

The resulting provisions would bar providers from offering returns simply for holding stablecoins, while still allowing them to reward customers for activities that are not equivalent to deposit interest, according to research by Galaxy. With the vote delayed, that arrangement remains out of law, and the broader question of how stablecoin products should be treated sits in the same queue as other unfinished Senate business.

Russia sanctions and a senator’s funeral move ahead of crypto legislation

Senate Majority Leader John Thune appears to have prioritized other items on the chamber’s agenda. Thune began the process to approve several nominations on Monday and is set to take up a package of sanctions against Russia at the Tuesday night Senate session, at which point he will start the cloture clock.

Under Senate rules, only one bill may be debated at a time. That means market structure legislation can advance only after those pending bills either pass or reach their deadline.

The Russia measure, which would target leadership in Moscow and impose tariffs on trade partners, is now known under the name of the late senator Lindsey Graham, who supported the initiative. Graham’s funeral is scheduled for this week, which will occupy the Senate on Tuesday and Wednesday in both Washington and South Carolina.

As a result, the Clarity Act is now expected to wait until next week for a vote, just before the Senate begins its summer recess on August 8. If that window is missed, the next opportunity would not come until September.

Ethics dispute still blocks 60 votes

The larger obstacle is that the bill has not been finalized. Negotiators are still working through a rule backed by Democrats that would prohibit high-ranking officials, including President Donald Trump, from having ties to the crypto industry.

Trump said last week that he would comply with the new rule, but Democrats rejected the proposal, saying it would leave his crypto holdings untouched.

The dispute has widened beyond ordinary partisan conflict. Axios reported that several progressive groups, including Indivisible and Demand Progress, sent a letter to every Democratic senator criticizing Senator Kirsten Gillibrand, who is working to negotiate a compromise.

Money is also central to the fight. Fairshake, the super PAC involved in the issue, says it has $125 million available.

Negotiations have reached the White House through Republican senators Bernie Moreno, Cynthia Lummis, and Thom Tillis, but the bill still needs 60 votes. So far, only Democratic senators Ruben Gallego and Angela Alsobrooks have backed the Banking Committee’s original proposal.

A 616-page bill still dependent on Democratic support

The legislation under debate is extensive. According to Galaxy Research, the latest draft runs 616 pages and includes 104 sections across four divisions.

In a previous report, Cryptopolitan described the bill as combining proposals from the Banking and Agriculture committees into two major parts, along with ethics limits, a law enforcement title, amendments to last year’s GENIUS Act, and other negotiated provisions. Galaxy estimated the bill’s chances of passage at 30%, while Senator Elizabeth Warren emerged as one of its most vocal critics.

State officials are also opposed. New York Attorney General Letitia James told the Senate Permanent Subcommittee on Investigations that the legislation would shift oversight from states to the Commodity Futures Trading Commission, limiting states’ ability to police scams. James’s office said it has received three times as many scam complaints over the past three years.

If the window closes

If the Clarity Act does not pass this session, the crypto industry still has other avenues, including the implementation of the GENIUS Act and rulemaking by the SEC and CFTC.

Even if the Senate approves the bill, it would still have to clear the House, where conflict among Republicans could complicate the process, and then reach Trump, who is known for refusing to sign bills until Congress agrees on new voter-identification requirements.

Next week could bring the first moves toward cloture before Congress goes on break. For crypto lobbying, that may be the highest level of progress achievable before September.

Circle CEO Jeremy Allaire has repeatedly argued that regulatory clarity would speed institutional adoption rather than simply benefit crypto firms.

“A comprehensive federal framework for payment stablecoins would strengthen the U.S. dollar and improve the competitiveness of the U.S. financial system,” Allaire has said.

He has also said that “institutional adoption remains on hold until Congress provides regulatory certainty.” In that framing, the issue is not only banks versus crypto legislation, but whether delayed legislation is postponing Wall Street’s deeper involvement in digital assets.

The Bank Policy Institute has argued that stablecoin issuers performing bank-like functions should face similar regulatory requirements. The Senate delay leaves unresolved whether Congress will eventually require issuers offering yield-like products to compete under rules comparable to those governing banks, a debate that has become more visible as lawmakers try to reconcile market structure, banking oversight, and consumer protection in one bill.

Implications for the crypto market

Circle welcomed Senate passage of the GENIUS Act, with Allaire saying: “The GENIUS Act establishes clear rules that will help modernize the financial system while protecting consumers and supporting innovation.”

Galaxy’s head of research, Alex Thorn, offered one of the sharper assessments of the bill’s market implications, saying: “As the Senate calendar tightens and a lack of progress in negotiations makes passage less likely than several weeks ago.”

He also wrote that a 60-vote bill still needs a merged Banking-Agriculture text, a motion to proceed, floor debate, an amendment process, and then House action, adding that the runway is quickly declining into just a matter of weeks.

Thorn said legislative momentum has slowed because “the Senate calendar tightens” and the time available for negotiations is “quickly declining into just a matter of weeks,” even as he still assigns the bill roughly even odds of becoming law this year.