Crypto Lobby's Push for Stablecoins Sparks Senate Stalemate

Crypto's big moment slipped away as the Clarity Act stalled in the Senate. The landmark bill aimed to bring digital assets into wider use, but its passage was hindered by disagreements over stablecoin yields.

The battle began when Coinbase CEO Brian Armstrong spoke out against restrictions on rewards programs for stablecoins like USDC. He claimed that such restrictions could lead to a massive deposit flight, jeopardizing the banking industry's ability to lend and keep the economy humming.

Armstrong's aggressive stance led to tense negotiations with lawmakers, including Sen. Angela Alsobrooks, who was a key negotiator on the bill. The CEO's tone was sometimes seen as inappropriate when speaking to U.S. senators, according to people involved in the process.

The stablecoin yield issue spilled into public view in January, and by late summer, the Clarity Act had grown to over 600 pages. Republicans and Democrats were frustrated with the process, and Senate aides on both sides grew exasperated with the crypto lobby, particularly Armstrong's team.