Regulatory changes in 2025 — including the GENIUS Act paired with new guidance from the OCC, FDIC, and Federal Reserve — opened the door for U.S. banks to launch their own digital asset products.
Since then, the drumbeat of announcements including products, partnerships, multi-billion-dollar acquisitions from the world’s largest financial institutions, stock exchanges, fintechs, card networks, and payments firms has created a strange combination of buzz and numbness.
It is genuinely hard to grasp the speed of change coming for an industry built on conservatism and epochal timescales. Two decades of transformation arrived in about a year, Silicon-Valley style, at the speed of the internet and AI-enabled software engineering — and it is now fully gripping financial services.
Reality check: The CLARITY Act was never supposed to be about stablecoins. That is what the GENIUS Act was for. And yet, as the Senate Banking Committee marked up the bill, stablecoin yield became the flashpoint. Closing the yield “loophole” has consumed millions of dollars in lobbying from the banking sector.
Even if the industry wins that fight, tokenized money-market funds will almost certainly fill the gap. The energy spent litigating is a distraction for the product question banks actually have a chance to win.
A recent conversation I had with a senior banker captured the moment we’re living in:
“We always ignored crypto and digital assets because of all the problems it had. We knew that if it ever became truly useful to our customers or truly important in the economy, we’d adopt it immediately. It’s just another part of financial services. And that’s what’s happening right now: We’re folding it in.”
Why the Yield Fight is the Wrong Fight
Both the GENIUS Act and the draft CLARITY Act prohibit stablecoin issuers from paying interest. The fight in Washington is about whether the exchanges and platforms distributing those stablecoins (Coinbase, Kraken, and others) can pay “rewards” that walk and talk like yield. The compromise text in the Senate Banking Committee threads a needle: It prohibits rewards that are the functional or economic equivalent of bank deposit interest, while preserving “bona fide” transaction-based incentives.
Banks have responded with more than 8,000 letters to the Hill demanding tighter language. The lobbying is rational given the stakes. But banks are fighting the last war. Even if exchanges are silenced tomorrow, tokenized money-market funds are already engineered to deliver yield in a stablecoin-shaped wrapper. The yield flows downhill like water and will find its way through.
Key insight: Look past the yield headline and the CLARITY Act is, on balance, a banking-friendly statute. It eliminates the threat of a retail-facing U.S. central bank digital currency, removing one form of direct government competition for deposits. It resolves the SEC-CFTC turf war that has paralyzed industry for a decade. It imposes BSA, KYC and segregation requirements on exchanges, brokers and dealers, handing banks a compliance home-field advantage that took us forty years to build.
And it explicitly permits banks to engage in digital asset custody, trading, lending and payments under existing banking law.
The Product Side is Where the Battle is Actually Being Won
The more interesting story is on the product side, and bankers are already participating in it. JPMorgan’s Kinexys platform has settled north of $1.5 trillion in tokenized transactions. SoFi launched a national-bank-issued stablecoin on a public blockchain. Visa and Mastercard built end-to-end stablecoin settlement rails. Goldman and BNY are tokenizing money-market fund shares for BlackRock, Fidelity and Federated Hermes.
The use cases stretch from payment stablecoins and tokenized deposits to tokenized money-market funds, digital asset trading and investment, loans collateralized by digital assets, and crypto-backed credit cards.
This is not the future. This is shipping product, today, at scale.
Key insight: For most U.S. banks, the strategic question is not, “Should we issue a stablecoin?”, as almost no bank should. It is whether you will plug into the rails being built by your existing partners or wait for customers to demand it and scramble. The threat to deposits is not that customers suddenly chase stablecoin yield; it is that deposits gradually follow better customer experiences elsewhere. The yield fight is a moat dispute. The product question is whether anyone is still inside the castle.
The ‘Hall of Fame’ Lesson
Lifelong banker Wade Peery tells a story about his college coach — a College Football Hall of Famer — who drilled one lesson into the team harder than any other: The price of admission for Saturday was preparation. You skip film, you skip the weight room, you skip the playbook, and Sunday’s tape will not be kind.
Banking is somewhere between Wednesday practice and Friday walkthrough right now. The product launches will not slow down to accommodate governance cycles. The institutions that do the work now, quietly before customers force the issue, will be the ones still on the field in 2030.
Bottom line: The CLARITY Act, whatever its final text, is a starting line, not a finish line. The work that determines who wins the next decade of U.S. banking will not happen on the Hill. It will happen in product roadmaps, vendor contracts, board agendas, and the unglamorous infrastructure decisions being made (or deferred) right now. The interest provision will be litigated for another decade. The product question will be decided in the next eighteen months. Banks can choose to build – or be built around.
Originally published on May 29th, 2026 in The Financial Brand.