The Real Reason the CLARITY Act Stalled 2: Conflicting Interests in the Digital Dollar War

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The Real Reason the CLARITY Act Stalled 2: Competing Agendas in the Digital Dollar War

※ This article is being published in its current draft form and will be updated to the final Daily Crypto Times (DCT) format in two days.

This piece is a follow-up to the earlier analysis, “The Real Reason the CLARITY Act Stalled: A USDC Yield War Between Coinbase and the Banks” . Reading that article first will help you better understand the background and incentive structures behind the conflicts discussed here.

The CLARITY Act, once hailed as a landmark U.S. digital asset bill that could finally resolve regulatory uncertainty in crypto markets, has suddenly stalled. Its loss of momentum has sparked a wave of speculation about what really happened.

On the surface, it is easy to blame cautious regulators or political timing. In reality, however, a very different force is at work. What stopped the bill was not external pressure from regulators, but conflicting interests within the industry itself—especially around stablecoin yield.

At the center of this conflict are three major groups: Bitcoin advocates, the traditional banking sector, and Coinbase together with Charles Hoskinson. All three are fighting for different positions in the emerging digital dollar economy, and their clash has become a key reason the CLARITY Act is stuck.

1. Bitcoin Advocates: “The CLARITY Act Markup Must Happen Now”

The Bitcoin camp is pushing hard for an immediate markup of the CLARITY Act. For them, this bill is not just another piece of regulation—it is a foundational step toward Bitcoin being fully recognized as a mainstream, regulated asset.

1-1. Regulatory Clarity as a Precondition for Market Maturity

  • Clear rules encourage institutional participation in Bitcoin markets.
  • Reduced legal uncertainty improves trust and overall market stability.
  • Regulatory clarity is seen as essential for the U.S. to stay competitive in crypto and blockchain innovation.

1-2. Why “Right Now” Matters

Bitcoin advocates argue that the CLARITY Act already has bipartisan support, and that further delays amount to unnecessary political friction. The longer the regulatory vacuum persists, the more they fear market stagnation and a loss of strategic advantage to other jurisdictions.

1-3. “Stablecoin Yield Is a Separate Issue from Bitcoin”

  • The most controversial part of the current draft is the ban on stablecoin yield.
  • Stablecoins are dollar-linked instruments, whereas Bitcoin is an independent asset that does not rely on interest-bearing models.
  • From the Bitcoin camp’s perspective, it is inefficient and unreasonable for Bitcoin regulatory clarity to be held hostage by debates over stablecoin yield.

In short, Bitcoin advocates argue that stablecoin issues should be handled separately, while Bitcoin-related clarity should move forward immediately.

2. Traditional Banks: Why They Strongly Support a Ban on Stablecoin Yield

Traditional financial institutions, especially banks, do not see the CLARITY Act as a narrow “crypto bill.” They see it as a law that will help decide who controls the economics of the digital dollar.

2-1. Preventing Deposit Flight

  • Interest-bearing stablecoins can directly compete with bank deposits.
  • This threatens the core banking model of “deposits → loans → interest margin.”
  • For banks, limiting or banning stablecoin yield is a way to protect their deposit base.

2-2. Weakening Stablecoin Competitiveness = Strengthening Banks

  • Under the current draft, stablecoins effectively become “non-yield digital dollars”.
  • Bank deposits, by contrast, can still offer interest.
  • This preserves—or even enhances—the relative competitiveness of traditional banking products in a digital dollar environment.

2-3. Banks Also Need Regulatory Clarity

  • Clear classification of digital assets (securities, commodities, payment instruments).
  • Defined rules for custody, brokers, and exchanges.
  • Stablecoin reserve and risk management standards.

For these reasons, banks tend to favor “strong regulation plus swift passage” of the CLARITY Act, especially with a strict stance on stablecoin yield.

3. Coinbase and Charles Hoskinson: “We Need the Bill, But Not in Its Current Form”

Coinbase and Charles Hoskinson are not opposed to the idea of the CLARITY Act itself. They agree that a regulatory framework is necessary—but they insist that the current draft must be revised.

3-1. Coinbase: The USDC Revenue Model Is Directly Threatened

Coinbase earns substantial annual revenue from USDC, largely through sharing interest income on USDC reserves with Circle. The current draft of the CLARITY Act, however, would prohibit exchanges and brokers from offering any direct or indirect benefit that is economically equivalent to interest on stablecoin balances.

In practice, this would make most stablecoin yield-based business models nearly impossible, and would directly undermine Coinbase’s core USDC revenue line. As a result, Coinbase has reportedly signaled to lawmakers that it cannot support the bill in its current form—significantly weakening its political momentum.

3-2. Charles Hoskinson: Concern for the Future of On-Chain Financial Innovation

  • A strict ban on stablecoin yield would weaken key models in DeFi, RWA (real-world asset) tokenization, and broader on-chain finance.
  • This could erode the U.S. position in web3 and push innovation toward jurisdictions with clearer, more flexible frameworks.

Hoskinson’s stance can be summarized as a call for regulation that does not suffocate innovation. He supports a framework, but not one that structurally disables yield-based on-chain financial products.

4. Conclusion: The CLARITY Act Is Not Just About Regulation—It’s a War Over the Digital Dollar

The reason the CLARITY Act stalled cannot be fully explained by regulatory caution alone. At its core, the conflict is about who captures the economic upside of the digital dollar.

Stakeholder Preferred Outcome Core Motivation
Bitcoin Advocates Fast passage Regulatory clarity for Bitcoin; stablecoin yield debates should not delay Bitcoin rules.
Traditional Banks Strict rules + fast passage Ban on stablecoin yield protects deposits and preserves control over dollar-based savings.
Coinbase & Charles Hoskinson Revised bill Stablecoin yield ban threatens revenue and on-chain innovation models.

In this light, the CLARITY Act is not just a technical regulatory framework. It is the battleground where Bitcoin advocates, banks, and on-chain innovators are fighting over very different visions of the digital dollar’s future.

Until there is a workable compromise on the core issue of stablecoin yield, U.S. digital asset regulation is likely to remain fragmented, contested, and strategically uncertain.

Younchan Jung
Researcher exploring structural shifts in AI, blockchain, and the on‑chain economy.

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