Bernstein: We are currently in a key window of opportunity for the passage of the "Clarity Act." Failure to reach a compromise quickly will increase the risk of bill postponement or failure.

January 12: Wall Street firm Bernstein said in its latest analysis that the window for the U.S. to pass the Crypto Market Structure Act is rapidly narrowing as legislators face deepening rifts between the banking industry and the crypto sector over stablecoin yield issues. Analyst Gautam Chhugani noted in a client report on Monday that while core parts of the "Clarity Act"—including the distinction between digital commodities and securities, and regulatory approaches to decentralized finance (DeFi)—are controversial, these issues are unlikely to block its progress. The main obstacle, he said, is that banking industry representatives are pushing to restrict crypto platforms from offering stablecoin yields. Last year’s "GENIUS Act," signed by former President Trump, banned stablecoin issuers from directly paying yield, but it still allows crypto platforms and their affiliates to distribute yields to users (typically 2% to 4% annualized). Banks view these incentives as a threat to traditional deposits, arguing the stablecoin market could grow from its current size of over $275 billion to trillions of dollars and become a "systemically important" area. The crypto industry counters that reopening this issue would undermine the hard-won legislative compromise in the GENIUS Act, calling it anti-competitive and anti-free market. Chhugani said both sides see the issue as an insurmountable red line, and the risk of the bill being delayed or failing will rise if no compromise is reached soon. Bernstein added that political timing is critical: the bill must advance by no later than Q2 2026 to avoid being derailed by midterm election dynamics. The firm noted the Trump administration’s pro-crypto stance has benefited the industry but warned momentum could stall if the yield dispute persists. Chhugani emphasized the current period is a "critical window of opportunity."