The Digital Asset Market Clarity Act, a bill designed to bring crypto assets into the economic mainstream and prevent another FTX-style collapse, is on life support. Prediction market Polymarket currently puts the odds of passage this year at just 25%.
The culprit, according to op-ed contributor Omid Malekan writing in Fortune, is a 'vicious interference campaign' run by the banking industry. The banks' core objection: the Genius Act — a stablecoin law that passed last year — only bans direct interest payments to stablecoin holders, leaving room for third parties to reward customers who use instruments like USDC. The banking lobby, Malekan argues, held the Clarity Act hostage over that opening.
The numbers tell a different story than distress.
The industry the lobby claims needs protection posted $740 billion in net-interest income (NII) last year, per government data. That figure exceeds Australia's GDP and surpasses the combined net income of the Magnificent Seven — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — over the same period. The KBW Bank Index has outperformed the NASDAQ over the past year, with profitability up and regulatory burden down.
J.P. Morgan alone recorded nearly $100 billion in NII last year. Yet the industry's trade groups argue that allowing third-party yield on stablecoins could 'erode the banking industry's ability to create credit, hurting farmers and small businesses.' Malekan calls that claim 'absurd,' noting that JPM currently pays nothing to depositors while charging close to 20% on credit card loans.
A selective memory on deposits.
The banking lobby has also been careful, Malekan writes, not to mention that banks account for only 20% of credit creation in the U.S., and that the largest banks lend out only half the deposits they collect — parking the rest at the Federal Reserve or in Treasuries. The industry has also periodically required government bailouts costing billions, a track record that sits awkwardly alongside its safety-and-soundness arguments against crypto firms.
Malekan draws a historical parallel to money market funds, another savings instrument banks fought using similar arguments. Trillions of dollars eventually flowed into those products, yet bank deposits are higher than ever.
The Clarity Act's broader stakes.
The bill was never intended to be about stablecoins. Its purpose was to create a regulatory framework for digital asset markets — new business opportunities and clearer rules for an asset class that has operated in legal gray zones for years. The banking lobby's intervention transformed a market-structure bill into a proxy war over deposit competition.
From a free-enterprise standpoint, the episode is instructive. An industry generating three-quarters of a trillion dollars in NII — backed by federal deposit insurance, Fed liquidity facilities, and a 'too big to fail' implicit guarantee — is deploying its most powerful lobbyists in Washington not to reduce its own regulatory burden, but to increase the regulatory burden on competitors. That is not free-market advocacy. That is rent-seeking dressed in the language of systemic risk.
American savers, who outnumber borrowers, would benefit directly from competition for deposits. The Clarity Act's collapse, if it comes, will not protect community banks or farm credit — it will protect the NII margins of institutions that have already won every structural advantage Washington can offer. Capital rewards clear rules. What it does not reward, over time, is a rigged playing field.
