The CLARITY Act, a significant piece of legislation governing the operational framework for stablecoins, is scheduled for markup in the Senate in January 2026, as recently confirmed by White House crypto advisor David Sacks. This development signals a crucial step forward for the crypto sector, especially in light of the stablecoin market’s anticipated ascendancy as a major buyer of United States government debt in the coming years.
Revealed on December 18, Sacks noted that Senate leadership has locked in dates for the markup session after a delay caused by a 43-day government shutdown, which stalled the bill's progress through the fall legislative period. The CLARITY Act had previously secured passage in the House with a 294-134 vote in July, reflecting bipartisan interest in establishing clearer regulatory guardrails for the cryptocurrency space.
The urgency in advancing this legislation is closely tied to the evolving dynamics of U.S. national debt. Central to this is the GENIUS Act, signed into law by former President Trump in July 2025, which mandates that stablecoins be backed one-to-one by U.S. Treasuries or cash equivalents. This requirement directly stimulates demand for short-term government debt instruments, potentially reshaping funding structures for the Treasury and expanding the accessibility of the dollar worldwide.
Treasury Secretary Scott Bessent has characterized this backing requirement as an instrument to "expand dollar access for billions across the globe," underscoring the international financial impact stablecoins could have as they integrate further into traditional capital markets.
Currently, the market capitalization of stablecoins stands at approximately $234 billion. Forecasts by Standard Chartered bank project this figure to reach $2 trillion by 2028, while Bernstein's estimates extend to $4 trillion by 2035. Coinbase Global Inc. (NASDAQ: COIN), a leading cryptocurrency exchange, anticipates stablecoins could conservatively achieve a market capitalization of around $1.2 trillion by the end of 2028.
Companies within the stablecoin issuer ecosystem already maintain substantial holdings in U.S. Treasury securities. Circle (NASDAQ: CRCL) reported holding $20 billion in Treasury bills, representing 43% of its total reserves. Meanwhile, Tether, one of the largest stablecoin issuers globally, holds $125 billion in U.S. Treasuries. Should the stablecoin sector reach the projected $2 trillion capitalization, issuers in this space could emerge as the fifth-largest category of U.S. government debt holders, potentially surpassing traditional international stakeholders such as China and Japan, whose collective share of U.S. Treasury holdings has dropped from 34% to 23% over the past decade.
This integration of stablecoins into the government debt market gains even greater significance against the backdrop of the national debt trajectory. As of December 3, 2025, the United States’ gross national debt reached $38.40 trillion, representing a year-over-year increase of $2.23 trillion. If current trends hold, the nation is expected to cross the $39 trillion debt threshold by roughly March 6, 2026.
Projections indicate that interest costs on this debt could reach $14 trillion over the next ten years, a steep increase compared to the $4 trillion in interest paid during the previous decade. This mounting debt burden accentuates the strategic importance of stablecoins as a source of stable and liquid funding for the government.
In the financial industry, momentum is building around the stablecoin regulatory environment even before final legislative approval. The Office of the Comptroller of the Currency (OCC) issued Interpretative Letter 1188 in December 2025, which sanctioned banks to conduct riskless principal transactions involving cryptocurrencies. As a result, major financial institutions including JPMorgan Chase & Co, Visa Inc., Mastercard Inc., and PayPal Holdings Inc. have initiated efforts to develop stablecoin infrastructure to capitalize on the expanding market.
JPMorgan has also indicated plans to accept Bitcoin (BTC) and Ethereum (ETH) as collateral on a trial basis, initially employing exchange-traded fund (ETF) based exposures. In parallel, the Federal Deposit Insurance Corporation (FDIC) circulated proposed procedures in December 2025 to streamline the application process for stablecoin issuers compliant with the GENIUS Act, aiming to facilitate the entry of banks and financial technology firms into the sector.
Despite these positive indicators, the path forward for the CLARITY Act is complicated by political and regulatory challenges. The year 2026 is marked by the U.S. midterm elections, with all 435 House seats and 33 Senate seats up for re-election. Historically, bipartisan legislative efforts tend to slow or stall during election years as lawmakers shift focus toward campaigning, raising uncertainty about the timeline for final passage.
Moreover, three contentious issues remain unresolved within the regulatory discussions:
- Yield-bearing Stablecoins: Banking groups argue that loopholes in the CLARITY Act would allow yield-bearing stablecoins to compete unfairly with traditional savings products, potentially distorting financial markets.
- Decentralized Finance (DeFi) Regulation: There is significant debate over the appropriate level of oversight. Some advocate strict regulations that risk criminalizing code development, while others warn that lax rules may create gaps exploitable for money laundering and related illicit activities.
- Custody Standards: Conflicts of interest have been raised concerning custody and regulatory standards, particularly given the Trump family’s involvement in World Liberty Financial and the TRUMP meme coin, complicating consensus.
The ongoing discourse illustrates the complexity of crafting balanced legislation that supports innovation while ensuring market integrity and consumer protection.