Understanding the Impact of US Delays on the Digital Asset Market Clarity Act
Regulations governing the digital asset market are experiencing significant delays in the United States, with potential ramifications for the cryptocurrency industry. Leading attorney Mahmoud Abuwasel, a partner at the global law firm Wasel & Wasel, is well-versed in these issues, having represented clients in both US and UAE crypto litigation.
The US government had set a March 1, 2026 deadline to resolve the disputes surrounding the legislation. Despite the urgency, progress has been slow, causing concern among industry leaders. Meanwhile, the United Arab Emirates (UAE) has established a regulatory environment that is drawing in crypto firms and capital.
Understanding the GENIUS and CLARITY Acts
The GENIUS Act, signed into law on July 18, 2025, provided a federal framework for stablecoins. However, the Digital Asset Market Clarity Act, a much larger piece of legislation that regulates all digital assets, has hit a roadblock in the Senate. Crypto industry leaders are now in talks with the Senate Banking Committee and bank representatives to review the compromise that finally unblocked the CLARITY Act.
Abuwasel likens the passing of the GENIUS Act without the CLARITY Act to building a highway on-ramp without a highway. The GENIUS Act, he explains, offers a secure framework for the creation of US dollar-backed stablecoins. However, without the CLARITY Act, these stablecoins are being deployed into secondary markets that lack comprehensive federal oversight, creating a significant regulatory void.
Implications for Investors and Banks
The standoff over stablecoin yield is a critical issue, affecting everyday investors and traditional banks. At present, major stablecoin issuers generate substantial returns by holding billions in short-term US Treasuries to back their tokens. However, everyday retail investors currently see none of that yield. Should these Treasury-level returns be passed through to consumers, it could dramatically transform their financial situation.
On the other hand, traditional banks fear a massive outflow of deposits. Banks rely heavily on low-cost retail deposits to fund long-term assets such as consumer mortgages and business loans. If consumers can move their checking account balances into a fully reserved, government-regulated stablecoin paying a 5% yield, the traditional banking sector’s cheap funding could disappear. This is why the banking lobby is vigorously fighting to restrict stablecoin yield.
Industry Response and Lessons from the UAE
While Washington is locked in negotiations, digital asset clients are taking proactive steps. Many are establishing compliant, US-domiciled entities for explicitly permitted activities, while pushing operations involving secondary trading, yield generation, or digital commodities to offshore entities in jurisdictions with clearer rules, like the European Union or the UAE.
Abuwasel points out that the UAE has successfully addressed the classification of digital assets before enforcement, a step that the US has yet to take. The UAE’s comprehensive regulatory structure provides clear definitions, attracting significant institutional capital. In contrast, US regulatory fragmentation continues to drive innovation offshore.
While the future of the Digital Asset Market Clarity Act remains uncertain, the lessons from the UAE’s approach offer valuable insights for policymakers and stakeholders in the US. As the digital asset market continues to evolve, effective and timely regulation will be essential to foster innovation and protect investors.
Source: Retail Banker International
