Banks are fighting a ‘sideshow’ as Clarity Act stalls. Will it matter?

The Clarity Act is stalling in Washington — but industry insiders say the outcome has already been decided.

Zachary Townsend, CEO of crypto insurance company Meanwhile, says that traditional banks lobbying to block yield-bearing stablecoins are “fighting a sideshow.”

“Every incumbent fights a better financial product,” Townsend said. “Stalling the Clarity Act doesn't change where this ends.

“They lobby, they delay, but they lose the market anyway.”

Townsend’s optimistic take comes as the Senate Banking Committee failed to schedule an April markup of the Clarity Act, pushing debate into May as three sticking points remain: decentralisation provisions, securing Republican votes, and stablecoin yield.

The delay comes even as President Donald Trump told memecoin holders at Mar-a-Lago over the weekend that he wants the bill passed and would sign it immediately.

“The banks are fighting a sideshow while the real deposit displacement is already underway,” Townsend said.

What’s the issue?

At the heart of the standoff lies stablecoin interest.

The Genius Act, signed into law by Trump in July 2025, requires stablecoin issuers to maintain one-to-one reserves backing outstanding tokens. Those reserves can include US dollars, federal reserve notes, insured deposits, short-term Treasuries and money market funds.

Crucially, the law prohibits issuers from offering direct interest or yield to stablecoin holders. It does not explicitly block affiliates or third parties from…