US Senate delays stablecoin DeFi laws: DeFi yields face big risk now

A fractured stablecoin over the Capitol symbolizes delayed DeFi laws, casting a long shadow of risk.

US Crypto Regulation in 2025: Stablecoin Yields, DeFi, and Political Gridlock

📌 Senate Divided on CLARITY Act: Key Issues Delay Progress

📜 The CLARITY Act, a critical piece of legislation aimed at providing regulatory clarity for digital assets in the United States, faces significant hurdles in the Senate as of December 2025. The Act is designed to bring much-needed structure to the burgeoning crypto market, but disagreements over stablecoin yields, conflicts of interest, and the treatment of DeFi are stalling its progress.

⚖️ Legal expert Jake Chervinsky, Chief Legal Officer of Variant, reports a division within the Senate, with the Banking Committee addressing securities law aspects and the Agriculture Committee focusing on commodities law. Both committees have released drafts, but a markup—a process involving hearings and amendment votes before a full Senate vote—is unlikely until these key disputes are resolved.

Stablecoin Yields: Banks Seek Tighter Restrictions

One of the primary sticking points involves stablecoin yield. Banks are lobbying for a prohibition on interest payments on stablecoins, arguing that stablecoin issuers should not be able to offer any form of interest or yield to holders. This issue initially arose from the GENIUS Act where banks sought to prohibit such yields.

⚖️ While existing prohibitions prevent direct yield payments, banks view non-yield rewards or third-party yield provisions as a "loophole." They are pushing for broader restrictions within the CLARITY Act to close this gap. This highlights the traditional finance sector's apprehension about competition from the decentralized finance (DeFi) space, particularly concerning assets that could potentially offer similar returns to traditional savings accounts.

Conflicts of Interest: A Political Roadblock

📜 Another obstacle is the issue of conflicts of interest. Some Democratic senators have indicated they will not support the market structure legislation unless it includes provisions preventing the President’s family from conducting business in the crypto space. This political dimension introduces additional complexity, potentially delaying or even derailing the bill's progress. This political hurdle is not directly related to crypto regulation per se, but its entanglement with the CLARITY Act underscores the broader challenges of navigating the US political landscape when it comes to digital assets.

DeFi Regulations: Protecting Innovation

⚖️ Perhaps the most critical concern relates to DeFi. Market structure legislation traditionally focuses on centralized platforms that control user funds and transactions. However, traditional finance stakeholders are urging Congress to classify various entities within the crypto sector—developers, validators, and others—as intermediaries.

📜 Chervinsky emphasizes the importance of protecting developers, as their contributions are vital to the industry's viability. The risk is that overly broad regulations could stifle innovation and drive developers away from the US, hindering the growth of the crypto ecosystem. The debate highlights the fundamental tension between regulating centralized entities to protect consumers and fostering innovation in the decentralized space.

📌 Senate Markup Set For December 17-18

🏛️ Market analyst MartyParty provided an update on December 4, noting that the bipartisan Digital Asset Market Structure Bill is gaining momentum, with a markup session tentatively scheduled for December 17-18 in the Senate Banking Committee. If successfully passed, the bill could establish clearer pathways for tokenized real-world assets (RWAs) and mitigate "debanking" risks, paving the way for compliant exchanges.

🐂 This "regulatory convergence" is viewed as a potential catalyst for liquidity and a stimulus for the next bull market, reinforcing President Trump’s vision for the US to emerge as the "crypto capital of the world." This optimistic view hinges on the successful resolution of the aforementioned disputes and a balanced regulatory framework that encourages innovation while protecting investors.

Legislative gavels pull against a complex DeFi network, illustrating the gridlock over crypto regulation.

📌 Key Stakeholders' Positions

The following table summarizes the positions of key stakeholders involved in the CLARITY Act debate:

Stakeholder	Position	Impact on Investors
Banks	Stronger limits on stablecoin yields.	Potentially restricts stablecoin earning opportunities.
Democratic Senators	Tighter conflict-of-interest rules.	Could delay or alter the bill.
DeFi Developers	⚖️ Protection from overregulation.	Impacts innovation and US competitiveness.

📊 Market Impact Analysis

📜 The CLARITY Act's outcome will significantly influence the crypto market. Failure to resolve the disputes could lead to prolonged uncertainty, increasing volatility and potentially stifling investment. Successful passage, on the other hand, could provide the regulatory clarity needed to attract institutional investors and foster innovation.

💰 Stablecoins will be particularly affected. Restrictions on yield could decrease their appeal, potentially impacting their adoption and market capitalization. Conversely, clear guidelines could boost confidence and lead to wider integration with traditional finance.

⚖️ DeFi faces a pivotal moment. Onerous regulations could cripple the sector, driving innovation overseas. However, a balanced approach could allow DeFi to flourish within a regulated framework, attracting more users and capital.

🔮 Future Outlook

📜 The discussions surrounding the CLARITY Act are likely to extend into January 2026, given the complexity of the issues and the holiday break. The outcome will set the tone for crypto regulation in the US for years to come.

📜 Investors should closely monitor the progress of the bill, paying particular attention to the resolution of the stablecoin yield and DeFi regulation issues. The decisions made in the coming months will shape the landscape of the crypto market and determine the US's role in the global digital asset ecosystem.

A volatile DeFi yield graph over an empty legislative chamber reflects market risk from regulatory uncertainty.

📌 🔑 Key Takeaways

• The CLARITY Act, designed to provide regulatory clarity for digital assets in the US, faces significant hurdles in the Senate due to disagreements over stablecoin yields, conflicts of interest, and DeFi regulations.
• Banks are lobbying for stricter limits on stablecoin yields, viewing non-yield rewards or third-party yield provisions as a "loophole" that needs to be closed. This could limit earning opportunities for stablecoin holders.
• Some Democratic senators are insisting on conflict-of-interest provisions, potentially delaying or derailing the bill's progress due to political gridlock.
• The treatment of DeFi is a crucial concern, as overly broad regulations could stifle innovation and drive developers away from the US, hindering the growth of the crypto ecosystem.
• The outcome of the CLARITY Act discussions will significantly influence the crypto market, with potential implications for stablecoins, DeFi, and the overall attractiveness of the US as a crypto hub.

🔮 Thoughts & Predictions

The current regulatory landscape in the US is creating a climate of uncertainty that favors more agile jurisdictions. I predict that if the CLARITY Act continues to stall or results in overly restrictive measures, we will see a significant increase in crypto projects and talent moving to countries with clearer and more favorable regulatory frameworks, potentially leading to a 20-30% decrease in US-based crypto innovation over the next two years. This exodus could also diminish the US's influence on the global crypto stage, making it harder to set international standards.

🎯 Investor Action Tips

• Monitor the progress of the CLARITY Act closely, paying attention to amendments and committee votes.
• Assess your stablecoin holdings and consider diversifying into other asset classes if yield restrictions are implemented.
• Research crypto projects based outside the US to mitigate the risk of regulatory uncertainty in the US market.
• Stay informed about regulatory developments in other jurisdictions that may offer more favorable conditions for crypto innovation.

📘 Glossary for Investors

🏛️ Regulatory Clarity: Refers to the establishment of clear and comprehensive laws and guidelines governing digital assets, reducing ambiguity and promoting market stability.

🧭 Context of the Day

Today’s US crypto regulatory deadlock underscores the critical need for a balanced approach that fosters innovation while protecting investors and clarifying future strategies.

💬 Investment Wisdom

"The essential conditions of effective competition are that everybody should play by the same rules, and that the rules should be known."
— Louis D. Brandeis

Crypto Market Pulse

December 6, 2025, 03:10 UTC

Total Market Cap

$3.13 T ▼ -2.80% (24h)

Bitcoin Dominance (BTC)

57.02%

Ethereum Dominance (ETH)

11.69%

Total 24h Volume

$125.72 B

Data from CoinGecko

This post builds upon insights from the original news article. Original article.

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