CLARITY Act: US Banks Could Strangle Stablecoin Innovation

The United States Senate adopted the CLARITY Act bill in committee on May 14, 2026, aiming to strictly regulate the issuance and use of stablecoins in the United States. Passed with 15 votes in favor and 9 against, this bill imposes strict requirements on issuers, such as 100% collateralized reserves or regular audits. However, its final adoption remains uncertain due to opposition from the American Bankers Association (ABA) , which fears unfair competition with traditional banks. What Happened The CLARITY Act was adopted in committee by the U.S. Senate on May 14, 2026, with 15 votes in favor and 9 against. This bill seeks to regulate stablecoins by imposing strict rules, such as fully covered reserves backed by stable assets or regular financial controls. The American Bankers Association (ABA) opposes it, arguing that it would create unfair competition at the expense of traditional banks. Among the proposed measures, some could directly impact decentralized finance (DeFi) protocols. For example, pools displaying extreme yields, such as the morpho-blue/1337USDC pool with an annual yield of 297,995% APY (total locked value of $11.4 million on Ethereum), could be limited in their operations. Similarly, interactions with tokenized assets might be restricted. Why It Matters Stablecoins play a central role in the cryptocurrency ecosystem, particularly in DeFi, where they serve as a basis for fast and low-cost transactions. Overly strict regulation, such as that proposed by the CLARITY Act , could reduce their liquidity and utility, affecting the entire sector. Issuers of stablecoins like Tether (USDT) or Circle (USDC) would need to comply with new rules, which could limit their growth and innovation potential. For DeFi protocols, the impact could be twofold: on one hand, a decrease in available yields for users, and on the other, reduced access to the liquidity needed for their operations. The opposition from the ABA and the uncertainty surrounding its final adoption by Congress make the future of this bill particularly unclear. A final version could emerge, potentially limiting or amplifying its initial impact on the market. What to Watch The final adoption or rejection of the CLARITY Act by the U.S. Congress, whose outcome remains uncertain. The reactions of stablecoin issuers, such as Tether (USDT) or Circle (USDC) , who may adjust their strategies based on the new rules. The impact on DeFi pools with extreme yields, whose total locked value (TVL) could decrease if stablecoins become less accessible. The ongoing negotiations between the United States and Iran, with a temporary ceasefire until May 31, 2026, which could indirectly influence the cryptocurrency market. Potential adjustments to regulatory requirements, which could evolve before final adoption.