Galaxy Research warns unresolved hurdles could still derail US Crypto Bill
A fragile breakthrough on stablecoin incentives has breathed new life into the CLARITY Act, a flagship US crypto bill, but research firm Galaxy is warning that the hardest part is still ahead. Despite the political momentum, a cluster of unresolved regulatory fights continues to threaten the legislation’s path through Congress and could easily delay, dilute or kill the bill altogether.
Stablecoin compromise breaks one deadlock
In March 2026, a bipartisan group of lawmakers led by Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) announced a tentative compromise with the White House on how stablecoin rewards should be treated. The deal targets a long‑running tension between traditional financial institutions and crypto platforms over yield‑bearing stablecoin products.
For years, major banks have argued that the interest‑like rewards offered on stablecoin holdings at exchanges and fintech platforms could trigger a dangerous shift of deposits out of the banking system. By making stablecoins look like high‑yield savings accounts without bank‑level oversight, critics warned, exchanges might siphon liquidity from regulated lenders and undermine financial stability.
The Tillis-Alsobrooks agreement attempts to balance those concerns with the crypto sector’s need to offer competitive products. While specific technical language has not been fully released, the framework reportedly imposes clearer rules on which entities can pay stablecoin rewards, how those rewards are disclosed, and what risk controls must be in place.
The White House, via crypto policy adviser Patrick Witt, welcomed the bipartisan breakthrough and described it as a major milestone in the broader push to get the CLARITY Act over the line. Resolving the stablecoin question removes one of the most visible points of friction between Wall Street and the digital asset industry.
Galaxy Research: stablecoins were only the first battle
Alex Thorn, head of research at Galaxy Digital, cautions that the compromise on stablecoin rewards solves only one part of a deeply fragmented policy landscape. In his view, lawmakers have focused intensely on stablecoins because they are easy to understand and politically salient, but beneath that headline issue sits a stack of more complex disputes.
Among the biggest unresolved questions highlighted by Thorn are how the United States should regulate decentralized finance (DeFi), which protections developers deserve when building open‑source protocols, and how far the Securities and Exchange Commission’s (SEC) authority should extend over digital assets.
These are not minor drafting issues. They cut to the heart of whether crypto will be treated as an experimental corner of finance or as infrastructure with its own rules and regulatory logic. Each topic pits powerful constituencies against one another: securities regulators against commodity regulators, banks against fintechs, protocol developers against enforcement agencies.
A shrinking window for passage
Timing adds another layer of difficulty. Thorn stresses that the legislative calendar is rapidly becoming the bill’s biggest enemy. If the CLARITY Act does not clear the Senate Banking Committee by the end of April, the probability of it becoming law in 2026 drops sharply.
Congress faces a crowded docket: appropriations deadlines, election‑year political battles, and competing priorities in technology, defense, and healthcare. Major financial reform almost never passes in the final stretch of an election cycle unless it is directly tied to a crisis. Without committee approval in the coming weeks, the CLARITY Act risks slipping into the next Congress, where leadership changes and shifting political coalitions could force a full renegotiation.
To have a realistic shot, the bill needs not only to exit committee but also to win a Senate floor vote by early May. From there it would still have to align with any House legislation, clear potential conference negotiations, and arrive on the president’s desk before the political climate turns fully toward campaigning.
Why the CLARITY Act matters so much
The CLARITY Act aims to create a comprehensive regulatory framework for digital assets in the United States, something industry participants have called for repeatedly as enforcement actions, court rulings, and agency guidance have created a patchwork of de facto rules.
At its core, the bill seeks to answer three fundamental questions:
1. When is a digital asset a security, a commodity, or something else entirely?
2. Which federal agencies have primary oversight of different parts of the crypto ecosystem?
3. What standards should apply to stablecoins, exchanges, custodians, and DeFi protocols?
Without clear answers, crypto firms often struggle to know whether launching a token, offering a yield program, or listing a new asset will trigger a securities investigation or fall under a different regime. This uncertainty has fueled complaints that innovators are being pushed offshore and that US investors are left with less access to regulated products.
If passed in something close to its current vision, the CLARITY Act could anchor the next decade of US crypto development, setting rules for stablecoins used in payments, tokens used in fundraising, and decentralized platforms that blur the line between finance and software.
DeFi: the regulatory blind spot
DeFi remains one of the most contentious arenas. Protocols that offer lending, trading, derivatives, and synthetic assets through smart contracts do not fit neatly into existing categories designed around identifiable intermediaries like brokers or banks.
Regulators have struggled with basic questions:
– Who is responsible when a protocol is “fully decentralized”?
– Can anonymous governance token holders be treated like controlling shareholders?
– How should know‑your‑customer and anti‑money‑laundering rules apply when users interact with code rather than companies?
The CLARITY Act must address whether DeFi front‑ends, liquidity providers, or protocol developers carry compliance obligations, and what liability they might face for user behavior. Too strict an approach could push DeFi entirely outside the US, while a too‑light touch risks regulatory arbitrage and unchecked systemic risk.
Protecting developers without giving criminals a free pass
Another unresolved element involves legal protections for software developers and protocol contributors. Many in the industry argue that writing and publishing code should be treated as speech, and that developers should not automatically be held accountable for how others use open‑source tools.
Law enforcement and some regulators counter that sophisticated DeFi and privacy tools can be deliberately engineered to evade sanctions, launder funds, or facilitate fraud. From their perspective, complete immunity for developers would create a safe harbor for bad actors.
The CLARITY Act needs to draw a line between neutral, good‑faith development and active participation in illicit schemes. That might involve defining when a developer crosses from publishing code into “operating” a financial service, or when providing upgrades, user interfaces, or marketing materials transforms a technical contribution into a regulated activity.
The SEC’s reach remains a flashpoint
No issue looms larger than the institutional power of the SEC. Over the last several years, the agency has pursued an aggressive enforcement agenda, arguing that many tokens are unregistered securities and that several major platforms have been running unlicensed securities exchanges or broker‑dealers.
Industry advocates want the CLARITY Act to narrow the SEC’s discretion, for example by codifying when a token transitions from a security to a non‑security once a network is sufficiently decentralized. They also seek safe harbors for token launches and clearer exemptions for utility tokens.
The SEC, on the other hand, has resisted attempts to limit its jurisdiction, maintaining that existing securities laws already cover much of crypto and that new carve‑outs could weaken investor protection. Any compromise written into the bill must satisfy legislators who prioritize consumer safety without smothering innovation.
Political calculations in an election year
Behind the policy debates lie electoral realities. Lawmakers are sensitive to headlines about hacks, scams, and market crashes. Supporting a crypto‑friendly bill could be framed as siding with speculative finance over ordinary savers, particularly if markets turn volatile.
At the same time, an increasingly vocal bloc of voters, entrepreneurs, and institutional investors now view crypto as a strategic technology sector. They argue that lagging behind other jurisdictions on regulation could cost the United States jobs, tax revenue, and influence over the next wave of financial infrastructure.
This split runs across party lines. There are Republicans who support strict oversight and Democrats who favor innovation‑friendly rules, and vice versa. The bipartisan nature of the stablecoin compromise shows there is room for agreement, but it also means every new provision must thread a narrow political needle.
What happens if the bill stalls?
If the CLARITY Act fails to advance in the coming weeks, the status quo will persist: regulation by enforcement, overlapping agency claims, and continued uncertainty for businesses and investors.
In that scenario, courts will continue to shape crypto law case by case, producing fragmented precedents that are difficult to reconcile into a coherent national policy. Some firms will stay and fight, others will relocate key operations to jurisdictions with clearer rules, and large traditional institutions may delay deeper engagement until the legal fog lifts.
The longer this environment lasts, the more likely it is that global standards will be written elsewhere, with the US reacting rather than leading.
Outlook: progress, but no guarantees
The compromise on stablecoin rewards has undeniably injected momentum into the CLARITY Act. It shows that lawmakers, regulators, and industry stakeholders can close at least some of the gaps that have frozen earlier legislative attempts.
Yet, as Galaxy Research emphasizes, the unresolved questions around DeFi, developer liability, and SEC authority are more intricate and politically fraught than the stablecoin dispute that just saw tentative resolution. Each requires technical expertise, patient negotiation, and a willingness to accept trade‑offs.
With the legislative calendar tightening and the window for action this year narrowing, the coming weeks will reveal whether the CLARITY Act becomes the foundation of a new US crypto regime-or another ambitious proposal left on the cutting room floor of Congress.