The Clarity Act Didn’t Give Us Clarity. That Was Never Its Job.
On September 15, the U.S. Senate had a chance to move forward with legislation that could have answered some of the biggest questions surrounding digital assets and their place in the financial system. It didn’t happen.
The Digital Asset Market Clarity Act fell short on a procedural vote, receiving 49 of the 60 votes needed to advance. For community banks and credit unions, one of the most closely watched issues involved stablecoin rewards and whether digital asset platforms should be allowed to offer incentives that function much like interest on a deposit.
Banking associations had good reason to engage in that debate. The ABA, ICBA and state banking associations argued that allowing stablecoins to compete for deposits with interest-like rewards could eventually pull funding away from community financial institutions and reduce the money available for local lending. Their advocacy helped keep that issue front and center as the legislation evolved.
But the bill didn't advance, and the competitive question didn't disappear with it. If anything, what happens next offers a useful lesson about the difference between regulatory clarity and strategic clarity.
I've been writing about the Zen of Banking for a while now, and one of its central ideas is that clarity isn't something we wait for someone else to give us. It's something we create for ourselves.
For much of the past year, it was understandable for banks and credit unions to watch Washington and wonder how the rules would take shape. Stablecoins were evolving quickly, legislation was moving and regulators were weighing their roles, so waiting for a little more certainty before deciding what any of this meant for your institution probably felt prudent.
That certainty hasn't arrived. Instead, more of the work has shifted back to regulators, including the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), operating under the authority they already have. Within days of the Senate vote, both agencies were taking steps on digital assets, and the CFTC had sent a broader crypto-market rulemaking into the federal review process. The regulatory environment will continue to develop, but probably through a less predictable path than many in the industry had hoped.
And that's where the Zen viewpoint is helpful, because there is a difference between paying attention to uncertainty and allowing uncertainty to determine your strategy.
Banking associations should continue advocating for rules that protect the ability of community institutions to compete and lend, just as regulators should think carefully about the unintended consequences of the rules they write. Congress may eventually return to these questions as well. All of that matters, but none of it can answer the question that matters most to your institution:
Why do people keep their money with you?
I'm not talking about why they opened an account ten years ago or why their parents banked with you. I'm talking about why they choose to keep their money with you today, and whether those reasons will still be compelling when they have more places to hold, move and manage their money.
That's a much harder question than anything Congress was going to settle.
If the answer is primarily inertia, then stablecoins should concern you, but so should fintechs, digital banks and whatever comes after them. It doesn't take much of an incentive to persuade someone to move money from an institution they don't feel particularly attached to in the first place.
If customers stay because you make their financial lives easier, solve problems quickly, provide useful advice and show up when it matters, you're competing on something much more durable. That doesn't make stablecoins irrelevant; it means the more useful question becomes not simply how you protect the deposits you have, but what your customers will expect from you next.
Some of those expectations are already becoming visible. People will want money to move faster and more cheaply, and they'll expect financial services to become easier to use and more seamlessly connected to the rest of their lives. Over time, some will also expect capabilities built around digital assets and new forms of money.
Mindfulness asks us to look at those changes without immediately sorting them into threats and opportunities. Instead, the first question should be what they tell us about changing customer needs and where our own products or experiences may be falling short.
Consider what's already happening. Just before the Senate vote, Coinbase announced a partnership with Moov designed to give more than 1,000 community banks and credit unions access to stablecoin payments, settlement and real-time funding. But this isn't simply a crypto-industry story. Fiserv has introduced FIUSD, its own stablecoin infrastructure for financial institutions, while FIS has integrated USDC payments into its Money Movement Hub and is building additional capabilities around tokenized deposits and bank-controlled digital money.
Whether any of these solutions belongs in your strategy is something each institution will have to decide. Their arrival, however, illustrates a larger point: protecting the value of community banking and participating in new forms of financial services don't have to be opposing strategies.
That is an important distinction, because the debate over stablecoins can easily become a debate about preserving what exists today. There are certainly things worth protecting, including the role deposits play in funding local lending, but protection alone doesn't tell an institution how it should compete as customer expectations, technology and the financial system continue to change.
This is also why advocacy, however important, can't substitute for strategy. The industry's associations should keep making the case for policies that allow banks and credit unions to compete on a level playing field, while individual institutions have a different responsibility: deciding how they will remain valuable to customers regardless of exactly where Washington lands.
That's where simplicity enters the picture.
The regulatory environment around digital assets may become more complicated before it becomes simpler, with agencies writing rules under existing authority, courts being asked to determine how far that authority extends, Congress potentially revisiting legislation and future administrations taking different approaches. Trying to build a strategy around every possible regulatory outcome is a good way to spend a lot of time reacting to things you don't control.
A simpler approach begins with what you do control: understanding why customers choose you, what they're likely to expect from you next and where your institution needs to evolve to remain relevant to them. Those questions won't eliminate uncertainty, but they give you a way to make decisions within it.
Congress may eventually give us clearer rules, and regulators will fill in some of the gaps in the meantime. Neither, however, can answer the question that matters most: Why will customers choose you in a financial system with more choices than ever?
That kind of clarity was always ours to find.
Joe Sullivan is CEO of Market Insights, Inc. He writes and speaks on demographics, growth strategy, and the intersection of leadership and mindfulness in banking — a framework he calls the Zen of Banking. Connect with him on LinkedIn or at jsullivan@formarketinsights.com.
