CLARITY Act Could Unlock 11 Crypto Activities for US Banks

The Congressional Research Service has analyzed the Senate-reported CLARITY Act, which could allow US banks to engage in 11 categories of crypto activities. These activities include digital asset underwriting and dealing, and would be permitted for all types of banking organizations and credit unions, regardless of whether they are insured or not.

The report found that the proposed underwriting permissions would exceed the authority of banks in comparable traditional securities markets. The House-passed version of the bill would also permit certain crypto activities, but would only allow financial holding companies to undertake these activities in nonbank subsidiaries.

Banking associations have opposed stablecoin rewards, arguing that they could draw deposits away from lenders and reduce their ability to extend credit. The associations have requested changes to the wording of the bill to prevent interest-like incentives.

Meanwhile, the Federal Reserve has continued implementing the GENIUS Act, which established a federal framework for payment stablecoins. The Fed has proposed rules that would require supervised issuers to fully back outstanding stablecoins with permitted assets, and would establish an application process for supervised banks seeking permission to issue payment stablecoins.