U.S. Crypto Legislation to be Reviewed! Setting a red line for stablecoin yields, SEC: Implementing crypto capital by 2026

The CLARITY Act enters Senate review, SEC Chairman Atkins is optimistic about the implementation of crypto market reforms by 2026, and the United States is striving to become the global crypto capital.

With the push from the U.S. Senate, SEC Chairman is optimistic about realizing the “Crypto Capital” vision by 2026

The U.S. cryptocurrency regulation process is approaching a critical milestone. The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, recently confirmed that the U.S. Senate will review a landmark bipartisan digital asset market structure bill. This legislative draft of the CLARITY Act aims to thoroughly end the long-standing regulatory uncertainty that has plagued the industry and to establish the U.S. as the global “Crypto Capital.”

In an interview with Fox Business, Atkins expressed extreme optimism about the regulatory outlook for 2026. He believes that as the bill advances, the executive branch is rapidly executing its economic strategy to move digital asset markets out of regulatory gray areas.

Image source: Fox Business SEC Chairman Paul Atkins expressed optimism about the regulatory outlook for 2026 in an interview with Fox Business

Although the Senate Agriculture Committee led by John Boozman has decided to delay its version of the bill until the end of January to garner more bipartisan support, the Senate Banking Committee, chaired by Tim Scott, still plans to hold a hearing as scheduled on Thursday.

Atkins emphasized that this legislation complements the previously signed GENUIS Act at the end of 2025, jointly forming the legal foundation for recognizing crypto assets and establishing stablecoin regulations in the U.S.

Stablecoin Yield Ban Sparks Game of Chess, Draft Clarifies Between “Holding” and “Trading Rewards”

In the latest publicly released 278-page amended draft, the distribution model of stablecoin yields has become the focal point of contention. To address concerns from the traditional banking industry about capital outflows, the draft explicitly states that digital asset service providers cannot pay any form of interest or yield solely because users “hold” payment stablecoins.

This change is mainly driven by strong lobbying from the banking industry. The American Community Bankers Association warned that without restrictions, up to $6.6 trillion in deposits could flow from traditional finance to crypto platforms, threatening banks’ lending capacity to small businesses, farmers, and students.

Further reading
American Community Banks: Stablecoins pose deposit outflow risks! Call for Congress to close loopholes in the GENUIS Act
U.S. Banks Resist Stablecoin Interest! Warn of $6.6 Trillion Deposit Risks, JPMorgan Speaks Up for Stablecoins

However, the bill does not completely ban yields; it delineates a red line for “activity-related rewards”: as long as the yields are linked to specific actions such as trading, payments, transfers, staking, providing liquidity, or governance participation, they are not subject to this restriction.

This distinction is seen as a compromise proposed by Senator Angela Alsobrooks, aiming to ensure stablecoins remain competitive in the payments market while not becoming unregulated bank deposits. Additionally, the SEC and the Commodity Futures Trading Commission (CFTC) will be required to establish disclosure rules within 360 days, ensuring that operators communicate clearly to users that stablecoins are neither investment products nor insured deposits.

Clarification of Regulatory Authority and Token Classification, Software Developers Granted Liability Exemptions

Besides yield disputes, the core task of the bill is to clarify the jurisdictional boundaries between the SEC and CFTC, ending long-standing conflicts of authority between the two regulators. According to the draft, a token that has become a major asset in exchange-traded products (ETP/ETF) before January 1, 2026, will be classified as a “non-attached asset,” meaning tokens like XRP, Solana ($SOL), Litecoin ($LTC), Hedera ($HBAR), Dogecoin ($DOGE), and Chainlink ($LINK) will receive the same regulatory status as Bitcoin ($BTC) and Ethereum ($ETH), no longer being considered securities.

Another significant development is the integration of the Blockchain Regulatory Certainty Act, jointly promoted by Senators Cynthia Lummis and Ron Wyden. This act provides protections for software developers and infrastructure providers who do not have control over assets, stipulating that developers who write or maintain open-source code without direct control over assets should not be considered financial service providers or money transmitters.

Further reading
U.S. Crypto Market Structure Bill Delayed to End of January! Lawmakers Propose New Bill to Protect DeFi Developers

Political Obstacles and Ethical Clauses, Bipartisan Consensus Key to Passing the Bill

Although the legislative framework is becoming more complete, the final passage in the Senate still faces many political hurdles. Currently, the Republican Party holds only a narrow majority, and passing the bill typically requires at least 60 votes, meaning support from some Democrats is necessary.

Some Democratic Senators have expressed strong demands to include strict ethical clauses in the bill, prohibiting public officials, including President Donald Trump and his family, from profiting from related crypto enterprises such as World Liberty Financial.

Additionally, Senators Jack Reed and other Democrats have called for a public hearing before the review, arguing that the current draft amendments are rushed and lack sufficient review time. Besides political struggles, the risk of a government shutdown at the end of January and the upcoming midterm elections in November could disrupt the legislative process.

TD Cowen’s analysis even predicts that, due to the Democrats’ control of Congress changing, the bill is more likely to be delayed until 2027 for final approval and fully implemented by 2029.

Digital Finance New System Outlook, Institutional Investors’ Global Competition Strategy

Beyond legislative disputes, traditional financial institutions are actively positioning for the digital asset market in 2026. Standard Chartered predicts 2026 will be the “Year of Ethereum” and plans to expand into prime brokerage services for digital assets through its venture capital division.

Further reading
Standard Chartered to Launch Crypto Prime Brokerage! From Custody to Trading, Building a Full Ecosystem

Meanwhile, the bill also proposes amending the Federal Reserve Act to remove restrictions that prohibit Federal Reserve banks from providing services to digital asset firms, and authorizes an additional $30 million annual funding to FinCEN from 2026 to 2030 to strengthen illegal financing monitoring.

Although the delay by the Agriculture Committee reflects ongoing bipartisan negotiations, the harmonious relationship between Chairman Atkins and the new CFTC Chair Mike Selig is seen as a positive signal by the market. If the bill is ultimately signed into law by the President in 2026, the U.S. will establish a comprehensive regulatory system covering everything from underlying code, stablecoin yields, to large asset classifications.