Congressional Progress on Clarity Act Buoys Spirits in Crypto Circles

There’s finally some clarity on the Clarity Act, a piece of legislation expected to pave the way for crypto’s mainstreaming.

The head of legal affairs at Coinbase expects the Clarity Act to pass by summer’s end, now that banks and crypto companies have reached a compromise regarding stablecoin rewards. Coinbase walked away from the act in January, when CEO Brian Armstrong wrote on X that no bill is better than a bad bill. He argued that banks were trying to shut down competition from crypto competitors by banning them from offering customers rewards for holding stablecoins on their platforms. Banks said that the system operated too similarly to traditional savings accounts. 

Now, Armstrong’s saying, “Mark it up,” meaning send it to the Senate Banking Committee for a hearing known as a markup. The revised Clarity Act lets customers earn rewards for activities like trading or staking, but not for just letting stablecoin sit in their accounts. 

Wall Street’s Warm Welcome

The act’s progress through the Senate raised investor hopes. Shares of Stablecoin issuer Circle, which reports earnings today, surged 20% shortly after the compromise came out. Coinbase, the main platform that distributes Circle’s USDC coin, jumped more than 6%. Bitcoin, meanwhile, broke past $80,000 for the first time since January. 

By getting the nod of approval from both big banks and regulators, crypto companies can start working with Wall Street to integrate blockchain tech into traditional financial architecture:

• Circle’s SVP of marketing said at Consensus Miami’s annual crypto conference last week that stablecoins could become a part of digital payments in a way that users won’t even notice. Stablecoins could be used to conduct transactions faster and cheaper than traditional payment rails. Chainalysis expects the number of on-chain stablecoin transactions to match off-chain Visa and Mastercard transactions sometime in the 2030s.
• The Clarity Act’s passage could prompt more traditional financial institutions to lean into the shift by supporting stablecoin payments, partnering with crypto companies, or issuing their own stablecoins.

A New Look: Proponents of the Clarity Act expect it to help crypto change from jeans and a hoodie to a suit and tie. Also at Consensus Miami, Binance’s CMO likened the moment to crypto moving past its Prohibition-era stage into an infrastructure-building phase. Stablecoins are the most palatable part of the crypto ecosystem for regulators and Wall Street, and could serve as an entry point for other parts of the crypto-verse to be considered.