Does the Clarity Act have loopholes? Bankers should be worried.

Author: Blockchain Knight; Source: X,@Knight_in_Blockock

The US banking industry continues to lobby Congress to push for the implementation of the Clarity Act, attempting to use the provisions of the Act to prohibit crypto platforms from using stablecoins to conduct deposit interest payment business, thereby protecting its own savings market.

The loopholes in the revenue classification rules of the Clear Coin Act have allowed leading exchanges like Coinbase and Ethena to explore a new model circumventing regulatory restrictions, posing a substantial challenge to traditional banks' deposit barriers. Section 404 of the Clear Coin Act is a key clause negotiated by various parties in the banking industry, dividing stablecoin returns into passive returns and behavioral returns. Passive wealth management that generates interest simply by holding assets is directly prohibited because its nature highly overlaps with bank demand deposits; however, rewards generated from actual operations such as linked transactions and asset transfers are permitted to be retained under the regulations. Banks strongly advocated for this restriction, with the core concern being that crypto platforms, without needing to pay bank-level reserves or be subject to FDIC deposit insurance, can attract depositors' funds with high yields. JPMorgan Chase CEO Jamie Dimon has publicly criticized the original details of the bill, stating that allowing crypto products to indirectly attract deposits would harm the legitimate interests of the banking industry. For the bill to be formally enacted, it still needs to go through the entire process of review by both houses of Congress and presidential signature. It's worth noting that stablecoins are Coinbase's core revenue segment, generating $305.4 million in revenue in the first quarter of 2026. The platform holds nearly $19 billion in USDC, accounting for over a quarter of the global circulating supply. To retain this profitable business, Coinbase has finalized a deep partnership with the synthetic dollar project Ethena, not only completing an equity investment in the project but also undertaking custody services for over $5 billion of Ethena's assets. Ethena's profit logic differs from traditional deposit interest calculations. It profits through basis arbitrage by combining spot holdings with shorting perpetual contracts, with all user returns derived from the project's active market-based trading. The returns users receive from depositing USDC no longer simply generate interest on idle funds, perfectly aligning with the legal definition of compliant returns. Industry estimates suggest that Coinbase's approximately $13 billion in idle USDC could be integrated into this product, attracting existing funds through product interest rate differentials. Currently, the annualized interest rate for US bank savings is generally only 0.38%, with demand deposit rates as low as 0.07%, while Coinbase's partnered products offer an annualized return of up to 3.8%. This significant yield difference continues to drive idle funds from retail investors and businesses to this platform. While total deposits at US commercial banks exceed $19 trillion, the outflow of tens of billions of dollars will not cause systemic risk in the short term. However, the loss of depositors will force banks to raise deposit interest rates, directly compressing their net interest margin profits. Industry analysts believe this collaboration is merely a pilot project for industry transformation. Coinbase can further leverage its ecosystem to connect with institutional financing and on-chain lending protocols, continuously expanding its on-chain dollar savings products. Originally intended to protect traditional banks, the regulatory bill has unexpectedly spawned another compliance path for stablecoins, and the battle for deposits between banks and the crypto industry has entered a new phase. Of course, if other exchanges follow suit, bankers may become restless and will likely continue to obstruct the passage of clear legislation.