Citi analysts report growing momentum for the CLARITY Act, a key U.S. crypto market structure bill, but highlight risks of delays beyond 2026 due to disputes over decentralized finance definitions and stablecoin rewards. The Senate Agriculture Committee has advanced its version, while the Banking Committee grapples with contentious issues. A White House meeting on February 2 aims to address stablecoin concerns.
The CLARITY Act is positioned as the essential catalyst for legitimizing digital assets in the United States, according to a report from Citi analysts led by Peter Christiansen. Released on January 30, 2026, the analysis notes that lawmakers are eyeing spring milestones, with work continuing even amid a potential government shutdown. However, rising risks could push final passage beyond 2026.
Crypto market structure legislation seeks to clarify regulatory oversight, token classification, and distinctions between securities and commodities laws. This framework is vital for providing legal certainty to crypto firms and investors, reducing regulatory overlaps, and encouraging domestic activity after years of enforcement actions that drove companies overseas. Supporters argue it will foster institutional adoption and innovation, while critics caution that vague boundaries could hinder decentralized technologies.
The biggest hurdle remains definitions for decentralized finance (DeFi), particularly determining when protocols, software, and developers qualify as regulated service providers. An overly restrictive approach might impede Web3 development, decentralized exchanges, derivatives, stablecoin yields, and layer-2 networks. Citi suggests compromises could focus on custody and surveillance rather than software neutrality.
Stablecoin rewards present a clearer path to resolution, with potential solutions like time-limited yields or alternative incentives. Banks worry about regulatory arbitrage, but crypto firms view rewards as crucial for adoption. Citi maintains that this issue does not alter its positive outlook on stablecoins for cross-border and business-to-business uses.
On January 29, 2026, the Senate Agriculture Committee advanced its bill version on a party-line vote, raising doubts about full Senate passage. The Senate Banking Committee, overseeing securities provisions and stablecoin disputes, faces intense lobbying from banks and crypto companies. Reconciliation will test bipartisan and jurisdictional harmony.
The White House's crypto council has scheduled closed-door talks for February 2, 2026, with banking and cryptocurrency executives, focusing on interest and rewards for dollar-pegged stablecoins to prevent derailing broader reforms.
Citi also addressed tokenized equities, proposing workarounds like securities classification, hybrid settlements, or SEC pilots to balance innovation with traditional market infrastructure.
Separately, HSBC noted that Coinbase's opposition to the bill is unlikely to halt progress, as CEO Brian Armstrong might accept a reasonable compromise.
