The U.S. Senate Banking Committee’s vote Thursday (May 14) to advance the Clarity Act marked one of the most consequential regulatory developments for digital assets since the collapse of FTX reignited demands for federal oversight.
The legislation, while still facing political and procedural hurdles, signals a growing bipartisan acknowledgment that what was once viewed as a fringe or adversarial sector is now increasingly treated as a strategic financial and technological industry
The market response demonstrates how central regulatory clarity has become to crypto valuations. Coinbase shares rallied after the Senate Banking Committee advanced the bill, while broader crypto-linked equities also moved higher as investors price in the possibility that stablecoins and digital assets may soon operate inside a more predictable U.S. regulatory framework.
That shift is critical for both incumbents and startups. Regulatory ambiguity has historically benefited offshore issuers willing to operate aggressively outside U.S. jurisdiction. Clearer rules, by contrast, tend to favor firms with compliance budgets, banking relationships and institutional ambitions. In practice, that means regulation could accelerate consolidation around a smaller group of large-scale issuers and infrastructure providers.
That reality may ultimately define the next phase of FinTech competition. The companies that control stablecoin payment rails, treasury flows and settlement infrastructure could become foundational players in global commerce in much the same way card networks and correspondent banks dominated the previous generation of payments.
Still, crypto and digital assets represent a barely visible slice of the global financial services landscape, and their challenge ahead remains formidable.
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Read more: CLARITY Act Advances as Crypto Oversight Debate Continues
Crypto’s Competition
The crypto industry’s narrative is no longer centered on trading tokens. It is now centered on controlling transaction infrastructure. Cross-border settlement, merchant payments, treasury operations and embedded finance are emerging as the primary battlegrounds because those are the areas where stablecoins promise to deliver economic advantages over legacy systems.
On Monday (May 11), for example, corporate payments company Corpay launched a collaboration with stablecoin infrastructure platform BVNK aimed at offering Corpay customers stablecoin wallets and settlement capabilities.
This is also why the fight over stablecoin yield became so politically sensitive. Banks recognize that if stablecoin issuers begin functioning like deposit-taking institutions, portions of traditional banking economics could migrate onto blockchain-based rails. The compromise emerging in Washington of allowing usage-based rewards while restricting passive interest payments reflects an attempt to prevent stablecoins from directly replacing bank deposits while still enabling innovation.
Traditional banking groups are continuing to intensify pressure on lawmakers as they recognize the competitive implications and the window for change starts to close.
“The banking industry continues to believe that the Clarity Act should be strengthened further by tightening the prohibition on interest-like rewards for holding stablecoin while also allowing certain payment stablecoin transactions and activities to generate rewards. Without the necessary guardrails, stablecoin offerings are expected to draw away bank deposits and threaten local lending and economic activity across the country. In that spirit, we will continue to work with senators in good faith to address this issue and improve the bill and its chances on the Senate floor,” said a coalition of banking industry groups in a statement shared with PYMNTS.
The broader geopolitical angle also matters. The United States is no longer debating crypto regulation in isolation. Jurisdictions including the European Union, Singapore, Hong Kong and the UAE are aggressively building digital asset frameworks to attract capital and innovation. The Bank of England announced Thursday that it is planning to relax its restrictions on stablecoins following pushback from cryptocurrency companies.
See also: Stablecoins’ Shadow FX Market Is Becoming a Corporate Treasury Issue
The Digital Asset Infrastructure Battle
The venture capital and overall crypto funding environment also reflects increasing confidence that regulation is moving toward normalization rather than prohibition. Venture investors, after all, are unlikely to aggressively finance stablecoin banking infrastructure if they believe the underlying business model faces existential regulatory risk.
Neobank Fasset on Thursday raised $51 million to expand its stablecoin-centric banking platform to emerging markets. PYMNTS wrote last month about the rising popularity of stablecoins in emerging markets, and the issues that result as they move into the mainstream. Elsewhere, the blockchain analytics company Elliptic on Tuesday (May 12) raised $120 million in new funding to further its mission of providing analytics to big banks, FinTechs, government agencies and crypto and payment companies.
PYMNTS also spoke last year with Liat Shetret, Elliptic’s then-vice president of global policy and regulation, about the changing crypto landscape in the U.S. “Up until a few months ago, we saw almost reconnaissance missions of crypto businesses looking in other jurisdictions,” Shetret said.
“They were leaving the U.S., and they were looking at Europe, they were looking at Asia, they were looking at the Caribbean. They were looking at all these different jurisdictions to find regulatory clarity, to find regulatory understanding,” Shetret added.
But even as institutional infrastructure expands, the industry continues searching for the elusive mainstream breakthrough: merchant payments. Transaction volumes have soared, major financial institutions have moved into the market, and several jurisdictions have clarified their regulations. Still, stablecoins have yet to provide the type of frictionless experience consumers associate with modern payments.
PYMNTS spoke recently with WalletConnect CEO Jess Houlgrave, who said that while the tokens have the infrastructure they need to scale, they still don’t offer a payment experience users can trust.
“We’ve gotten to this stage, predominantly actually over the last 18 months, where the technology is ready,” Houlgrave said in an interview posted Wednesday (May 13). “Liquidity is deep. I can move in and out of different assets between fiat and stablecoins easily. The enablers are there.”
“About 76% of users had abandoned a crypto payment in the last six months,” Houlgrave said, pointing to new research. “They’ve tried to pay with crypto and couldn’t.”