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Congress Faces Deadline to Advance Crypto CLARITY Act Before Midterms

Adam Forsyth
March 21, 2026
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The window to pass the most significant crypto law in US history is closing fast. If Congress cannot move the CLARITY Act by late April, the effort likely dies until after the midterm elections. For retail investors, this means another year of guessing which tokens the SEC might sue next.

Legislators are currently deadlocked over a single, specific issue: how much money stablecoins are allowed to pay you. It is a technical fight with massive consequences.

The CLARITY Act is facing a race against the clock to be passed and in place for the April midterms. Could it being passed take BTC to $80k?

(SOURCE: TradingView)

If lawmakers miss this spring window, the bill falls victim to the election cycle, leaving the industry stuck in regulatory limbo indefinitely.

This latest CLARITY Act update comes as the crypto market is flat over the past 24 hours, with a total market cap of over $2.6 trillion and $91Bn in daily trading volume.

CLARITY Act Update: The Mechanism of Section 404

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 matters because the CFTC is generally viewed as a more pragmatic regulator than the enforcement-heavy SEC.

But the entire bill has stalled because of one specific clause: Section 404. This section deals with “stablecoin yield.” To understand the fight, 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”), they are effectively acting like a savings account. But unlike a bank, they do not have to pay for expensive FDIC insurance or comply with strict capital requirements.

The mechanism in the current bill draft is murky. Section 404 tries to distinguish between “interest” and “loyalty benefits.” The banking lobby argues this is a loophole that lets crypto companies eat their lunch.

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The Midterm Deadline: Why the Clock Matters

In Washington, D.C., the calendar is the enemy. We are not just waiting for a text revision. We are racing against the campaign season. Political analysts view late April or early May as the hard cutoff. Here is why:

Once summer hits, lawmakers leave Washington to campaign for the midterm elections. Legislative activity grinds to a halt. Controversial bills, and crypto is definitely controversial, are the first to be abandoned. A bill that does not pass the Senate Banking Committee by May is effectively dead until the next Congress convenes in 2027.

There is a slim chance for a “lame duck” session after the November elections, but relying on that is a gamble. The current Senate draft for the CLARITY Act has already stalled once. If negotiations between banking lobbyists and crypto advocates do not yield a compromise in the next few weeks, the momentum will vanish.

Who Is Fighting Over This and What Comes Next

The battle lines are drawn between traditional finance and the crypto industry, with Congress stuck in the middle.

On one side, you have the banking lobby. They argue that if it looks like a bank account and pays interest like one, it should be regulated like one. They want Section 404 to strictly ban stablecoin issuers from paying yield.

On the other side, stablecoin issuers and DeFi protocols argue that “rewards” for staking or holding are fundamentally different from bank interest. They warn that banning yield would drive innovation offshore, leaving the US behind.

Senate Banking Committee leaders are trying to find a middle ground in which intermediaries (such as exchanges) might handle rewards rather than issuers directly. But the Congressional Research Service notes that current drafts leave the definition of a “holder” too vague to satisfy the banks.

We are watching for a committee markup schedule in mid-April. If that date passes without a hearing, you can assume the CLARITY Act is shelved until after the elections. The bill needs to move now, or it does not move at all.

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The post Congress Faces Deadline to Advance Crypto CLARITY Act Before Midterms appeared first on 99Bitcoins.





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