U.S. banks have formally opposed a compromise that would partially allow stablecoin returns, again shaking the chances that the crypto market-structure bill known as the CLARITY Act will pass this year.

On May 5, blockchain outlet The Block Crypto reported that TD Cowen said growing backlash from the banking industry could push review of the legislation into June.

The dispute centres on a compromise that would ban directly attaching deposit interest-like returns to stablecoins, while partially allowing user rewards generated during payment or transaction processes. Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks put forward the proposal on May 2.

But major bank industry groups, including the Bank Policy Institute, the Financial Services Forum, the Independent Community Bankers of America, the Consumer Bankers Association and the American Bankers Association, said on May 5 they opposed the compromise because it was insufficient. Jaret Seiberg (재럿 세이버그), managing director of TD Cowen's Washington Research Group, pointed to the fact that large and mid-sized banks are opposing it together as key. He said the banking industry's united front is increasing its influence in the standoff and that it cannot be concluded that the crypto industry will win and the banking industry will lose.

Seiberg also said he does not see a solution that would satisfy both sides at the same time. He said major crypto platforms want to keep paying returns to keep retail investors' liquidity in their wallets, but this is unacceptable to the banking industry. TD Cowen assessed the standoff by saying there is "no middle ground".

The legislative schedule has also tightened. Seiberg said the conflict could delay review of revisions to the bill until June. He also said that to hold a Senate vote by late July, the bill would need to pass the Senate Banking Committee by the end of June. Taking the Memorial Day holiday schedule into account, he said the time available to move is only a few days. He still sees the period before Congress' August recess as the de facto deadline for action on the bill.

Markets and the industry also warned that the next 2 weeks are important. Ripple CEO Brad Garlinghouse (브래드 갈링하우스) said on May 5 that the next 2 weeks for crypto legislation will be decisive. He said that if it is not handled this time, the situation could move into the midterm election cycle, sharply lowering the chances of passage, and that the likelihood of renewed discussion after the autumn elections could be even lower.

Beyond the stablecoin yield dispute, other variables remain. Seiberg has in recent weeks pointed to obstacles including vacancies at the Commodity Futures Trading Commission, conflict-of-interest controversy linked to World Liberty Financial, a crypto project associated with U.S. President Donald Trump, and concerns about Iran's use of crypto payments. Senator Tillis' demand to include an ethics provision in the CLARITY Act has added a new hurdle. Tillis, a member of the Senate Banking Committee, has shown a stance that he could oppose the bill if the language is left out.

On the regulatory front, there is also a view that the banking industry could hold the advantage. Seiberg said rules the Office of the Comptroller of the Currency will prepare under the GENIUS bill could limit most stablecoin yield offerings. Legal disputes are possible, but he said that if the CLARITY Act does not pass, the banking industry can respond by relying on that regulatory framework.

TD Cowen remains sceptical about passage of the CLARITY Act this year. Seiberg previously said the bill might require bipartisan compromise and direct intervention by Trump to clear the 60-vote threshold in the Senate. In March, he put the chance of passage this year at about one-third and forecast that if obstacles are not resolved, action could be pushed to 2027 and final rules could take effect in 2029.

The current dispute is focused on how far to allow stablecoin returns. As the interests of the banking industry and crypto platforms collide head-on, the situation is shifting into a phase in which the pace of action on the CLARITY Act itself affects the industry's competitive landscape.