A claim has emerged that opposition by the U.S. banking sector to the CLARITY bill could instead weaken banks’ own position.

On Aug. 6 (local time), blockchain outlet The Defiant reported that Miles Jennings (마일스 제닝스), head of policy and general counsel at a16z Crypto, said on X, formerly Twitter, that the banking industry’s move to block the CLARITY bill could backfire.

Jennings’ core argument is that the GENIUS Act is already in force. He said the GENIUS Act has accelerated on-chain movement of dollars and that other real-world assets will follow regardless of whether the CLARITY bill passes. In that situation, if the CLARITY bill stalls, he argued that the stablecoin deposit return structure banks most want to stop would remain intact.

He went on to criticise what he called the financial sector’s extreme efforts to block the CLARITY bill, saying it was instead hastening its own obsolescence. He said crypto brokerages would continue paying returns on stablecoin deposits under the GENIUS Act even if the CLARITY bill fails. That would mean the situation banks have opposed most strongly would continue, he added.

He also argued that the CLARITY bill is a mechanism that opens a path for traditional financial institutions to participate. Jennings said the bill could be a lifeline for institutions to take part in the on-chain economy and could enable the use of permissionless decentralised finance (DeFi). By contrast, he said that without the bill, many institutions would be pushed to the sidelines.

The backdrop to the dispute is regulation over compensation for holding stablecoins. On May 14, the Senate Banking Committee passed the CLARITY bill (H.R. 3633) by 15 to 9 and sent it to the full chamber for debate. The bill includes provisions to split oversight authority for digital assets between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

After that, six banking industry groups, including the American Bankers Association (ABA), the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, the Independent Community Bankers of America and the National Bankers Association, called for changes to the bill. They argued that interest-like compensation for holding stablecoins should be more strongly banned. They said that without separate safeguards, stablecoin products could siphon off bank deposits and threaten local lending and economic activity in the United States.

The groups repeated the same demand even after the Senate released an amended version on July 22. They argued the amended version could also put at risk local lending that supports U.S. economic activity and that stablecoins could absorb bank deposits that fund small business loans, mortgage loans and agricultural loans.

Jennings viewed the banking sector’s stance as a problem of internal incentive structures rather than strategic judgment. He said that in most traditional financial organisations, there is no punishment for defending the status quo, but responsibility will follow if problems emerge after conditions change. He added that some institutions oppose DeFi reflexively because they see it as removing intermediaries, but strategic institutions view DeFi as a tool to provide customers with cheaper and more efficient services.

The CLARITY bill is currently waiting for a vote schedule in the full Senate. More than 200 crypto companies and lobbying groups urged Senate leadership to set a voting schedule without delay. However, Alex Thorn (알렉스 손), head of research at Galaxy Digital, lowered the likelihood of the bill passing in 2026 to 60 percent from 75 percent, citing a reduced floor schedule and the fact that ethics and illicit finance-related provisions have yet to be finalised.

As a result, the debate over institutionalising the U.S. digital asset market is moving into a phase where arguments over stablecoin inflows and protecting bank deposits collide head-on. Whether a full Senate schedule is set is expected to be the next watershed.

“The bewildering thing about TradFi's extreme efforts to kill CLARITY is that they are likely accelerating their own obsolescence. GENIUS is already law and it opened the floodgates for dollars to move onchain. Other real-world assets will follow regardless of whether CLARITY…”