Representative Stephen Lynch, the ranking Democrat on the House Financial Services Subcommittee on Digital Assets, opposes the CLARITY Act (H.R. 3633), which passed the House in July 2025 with a bipartisan 294-134 vote. He warns the legislation could destabilize the banking system by enabling deposit flight to stablecoins, undermining banks’ lending capacity. The bill aims to clarify regulatory jurisdiction between the CFTC for digital commodities and the SEC for tokens structured as investment contracts, but stablecoin reward provisions are blocking Senate negotiations. Lynch argues that weakening the U.S. banking system’s deposit base would erode the institutional foundation supporting the dollar’s reserve currency status. The legislation remains stalled in the Senate as of mid-2026, with midterm elections approaching.
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