U.S. CLARITY Act Could Make Stablecoins Core Financial Infrastructure, DBS Says

U.S. CLARITY Act Could Push Stablecoins Into Core Financial Infrastructure, DBS Says

The U.S. CLARITY Act is starting to look less like another dull crypto bill and more like a real turning point for stablecoins. DBS says the legislation could move dollar-backed tokens from speculative crypto side tools into the plumbing of payments, settlement, and onchain finance.

• Stablecoins as infrastructure: from trading chips to payment rails
• Yield clampdown: passive returns banned, usage rewards still allowed
• Big winners: compliant giants like Tether and Circle
• Bank pressure eased: deposit flight risk gets a legal shield

The CLARITY Act, or Digital Asset Market Clarity Act, is a U.S. bill aimed at setting clearer rules for digital assets and stablecoins. DBS calls it a “structural turning point” because it could define not just how these assets are issued, but how they are allowed to behave in the financial system.

That distinction matters. Stablecoins are not just another trading gimmick. They are already used for payments, cross-border transfers, treasury management, exchange settlement, and increasingly for tokenized real-world assets. If the U.S. gives them a proper legal frame, they stop looking like crypto’s awkward middle child and start looking like digital financial infrastructure.

Why the yield fight matters so much

At the center of the debate is stablecoin yield. DBS says the bill would ban passive, interest-like returns on stablecoins while still allowing usage-based rewards tied to actual payments, transactions, and some staking or platform activity.

That difference sounds technical, but it is the entire ball game.

Passive yield means someone gets paid simply for holding a stablecoin, much like a bank deposit earns interest. Usage-based rewards, by contrast, are tied to activity. For example: spend, transfer, or use a token on a platform, and you may get a reward. Hold it idle, and you do not earn a fat little money-for-nothing stream just for parking cash.

That is why the banking lobby is sweating. Banks do not want stablecoins turning into shadow deposit accounts with a blockchain logo slapped on top. And they have a very practical reason for that fear: U.S. banks fund about 80% of lending from customer deposits. If money starts drifting out of deposits and into yield-bearing stablecoins, that is deposit flight — meaning cash leaves bank accounts and takes the lending fuel with it.

DBS says the compromise protects banks’ deposit base while still letting stablecoins grow into settlement rails for payments, tokenization, programmable liquidity, and onchain capital markets. In plain English: the bill tries to keep stablecoins useful without letting them become bank account replacements that compete directly with regulated lenders.

That is a constructive compromise, even if nobody gets to throw a victory parade. Banks get protection. Crypto gets legitimacy. Regulators get to claim they solved a problem. And users, if this works, get faster and cleaner money movement.

What passed, and what still has to happen

The U.S. Senate Banking Committee advanced the bill by 15–9. All 13 Republicans on the panel backed it, along with Democratic Senators Ruben Gallego and Angela Alsobrooks. The bill already passed the House 294–134 in July 2025, which gives it real momentum, but the Senate is where legislation goes to either live, die, or get watered down into legislative oatmeal.

To clear the Senate, the bill likely needs 60 votes to overcome a filibuster. With 53 Republicans in the chamber, supporters would need at least seven Democratic votes. That is possible, but it is not automatic. Anyone pretending Washington is a straight line is probably trying to sell you something with a newsletter attached.

Even if the legislation keeps moving, implementation may not arrive until 2027 or later. So the market is not waiting for some magical overnight flip. But policy direction matters, and the direction here is toward formal integration rather than hand-wavy enforcement by lawsuit.

Who wins if stablecoins become financial plumbing?

DBS expects the framework to favor large, compliant incumbents — the players that can afford legal teams, audits, licenses, and the rest of the compliance circus. That likely benefits Tether and Circle most, while smaller issuers may get squeezed out or pushed into niche territory.

DBS cited stablecoin market share of roughly 59% for Tether, 24% for USD Coin, 3% for Sky Dollar, and about 14% for others combined. In other words, the market is already highly concentrated. Tighter rules could make that concentration even harder to challenge.

The upside is obvious: stronger reserves, clearer standards, more institutional comfort, and fewer fly-by-night tokens pretending to be money. The downside is equally obvious: regulation can become a moat for the biggest firms, turning “decentralized innovation” into a permissioned club with a compliance desk at the entrance.

Circle Chief Strategy Officer Dante Disparte welcomed the shift, saying the compromise shows the U.S. has chosen “to lead rather than be pulled along” in digital-asset policy.

“to lead rather than be pulled along”

Coinbase Chief Legal Officer Paul Grewal also backed the logic, arguing that rewards should be tied to “actual participation.” The American Bankers Association, unsurprisingly, opposed the compromise language. Banks do not exactly line up cheerfully for products that can move money at internet speed and do not need a branch network full of fluorescent lighting.

Stablecoins are moving from buy-and-hold to buy-and-use

DBS strategists Chang Wei Liang and Chee Zheng Feng said the shift is from “buy-and-hold” toward “buy-and-use,” and that stablecoins are becoming part of the future “monetary stack.”

That phrase is doing a lot of work, and it should. Stablecoins are no longer just a trader’s escape hatch from volatility. They are increasingly being treated as the settlement layer for digital commerce, cross-border payments, tokenized assets, and corporate treasury flows. That is why the regulatory debate matters far beyond crypto Twitter.

When people talk about stablecoins becoming core financial infrastructure, they mean this: instead of just sitting on exchanges as a parking lot for crypto trades, stablecoins can become the rails that move value across apps, platforms, institutions, and jurisdictions. They are digital dollars with utility — and, if done right, a lot less friction than the old system.

The market is already voting with capital

DBS also pointed to growing institutional demand in crypto markets over the period from late March to early May. During that stretch, Bitcoin rose 18% and Ethereum climbed 8%. The bank estimated about $2 billion in net inflows into spot Bitcoin ETFs, while Strategy bought roughly $4 billion more BTC. Ethereum saw about $356 million in ETF inflows, alongside around $760 million in Ethereum buying by BitMine.

DBS said those purchases amounted to roughly 0.45% of Bitcoin’s market cap and 0.4% of Ethereum’s market cap. Those are not tiny numbers. They are the kind of flows that tell you institutions are not merely watching from the balcony anymore; they are buying tickets and moving into the front row.

On May 12, DBS cited Bitcoin at $80,526 and Ethereum at $2,278. Price levels matter less than the signal behind them: institutional accumulation is becoming a structural feature of the market, not a one-off headline.

That dovetails neatly with the stablecoin story. If Bitcoin and Ethereum are the assets institutions want exposure to, stablecoins are the settlement layer and cash leg that makes onchain finance actually work. That is where the boring stuff becomes the important stuff.

Why this matters beyond the U.S.

DBS says the U.S. framework could influence countries like Korea as they consider local-currency stablecoins. That is a bigger deal than it sounds. Once the United States sets a workable model for stablecoin regulation, other jurisdictions often follow, adapt, or at least stop pretending the issue does not exist.

That could be good for adoption, especially in payments and remittances, where faster settlement and lower friction can save real money. It could also help tokenization efforts, where stablecoins are often the grease that keeps onchain asset markets from seizing up like an old gearbox.

But there is a dark side too. Regulation can absolutely legitimize a technology while also narrowing it. The more compliance-heavy the environment gets, the more likely the market tilts toward large issuers, large exchanges, and large financial institutions. That is not decentralization; that is regulated consolidation with a blockchain veneer.

So yes, the CLARITY Act could be a major step toward mainstream adoption. It could also become the point where stablecoins stop feeling like open crypto infrastructure and start feeling like another heavily supervised payment product. Both things can be true at once. That is the inconvenient part nobody likes to print on the launch deck.

Key questions and takeaways:

• What is the CLARITY Act trying to do?
  It aims to set clearer U.S. rules for digital assets and stablecoins, including how they are issued, used, and treated in the financial system.

• Why is stablecoin yield the battleground?
  Because passive yield makes stablecoins feel too much like bank deposits. Banks fear that would pull money out of the deposit base they use to make loans.

• What is “deposit flight”?
  It means people move money out of banks and into another system. In this case, banks worry users could shift funds into yield-bearing stablecoins instead of keeping them on deposit.

• Who benefits most if the bill becomes law?
  Large, compliant issuers and infrastructure providers, especially Tether and Circle, are likely to gain the most from a clearer regulatory framework.

• How does this help stablecoins become more useful?
  It pushes them toward payments, settlement, and tokenized finance instead of just speculative holding or exchange parking.

• Does this favor decentralization?
  Not automatically. It may improve legitimacy and usability, but it could also concentrate power in the hands of a few large, regulated players.

• What does this mean for Bitcoin and Ethereum?
  It fits a broader institutional trend already supporting BTC and ETH through ETF inflows, corporate buying, and growing onchain settlement demand.

• Could other countries copy the U.S. model?
  Yes. DBS says places like Korea could be influenced by how the U.S. handles stablecoin rules and local-currency digital assets.

• Is this a done deal?
  Not even close. The Senate still needs to clear a high voting threshold, and implementation could drag into 2027 or later.

DBS may be right to call this a “structural turning point.” Stablecoins are no longer a weird crypto edge case. They are becoming part of the monetary stack — useful, regulated, and increasingly unavoidable. The question is whether that future stays open and competitive, or gets captured by the same old gatekeepers with better tech and cleaner branding.