The future of financial intermediation with or without the Clarity Act

When the Clarity Act failed to clear the Senate, many assumed US digital asset policy had stalled. A recent OMFIF Digital Monetary Institute roundtable with senior former regulators and key stakeholders from the industry concluded the opposite: the most consequential work is happening elsewhere, and the hard problems are less about legislation than about infrastructure. 

A senior former US official noted that the Genius Act took years of House committee work before it passed, and that Clarity was a far more ambitious bill; one that tried to codify rules for decentralised finance before the ideas had settled. Its failure, it was argued, should not surprise anyone, but the participant admitted it will not stop the market from developing. 

Others went further and called the bill’s failure a good outcome. The spot-market framework leaned too heavily on a futures-market model built for sophisticated institutions, and it would have locked definitions into statute the moment the Securities and Exchange Commission was already doing the work through guidance and rulemaking. The risk that a future chair reverses course is real but limited since changing a rule requires the same public process that created it. The central point: the most useful application of the technology, tokenising real-world assets, was never really about Clarity. Major asset managers and market infrastructure providers are already building, and the SEC’s innovation exemption and recent Commodity Futures Trading Commission guidance on tokenised collateral point the same way. 

Gaps and demand 

Some gaps remain. The spot market still lacks a federal framework, and illicit finance on permissionless chains is unresolved. A tokenised security should carry the same rights and obligations as the underlying security. 

The stablecoins market has grown from roughly $25bn in 2020 to just over $300bn, with projections of several trillion by 2030. Growth is real, but we should be cautioned against overreading it. Use remains concentrated in crypto trading and offshore demand for synthetic dollars. 

Caution is also needed when assessing whether stablecoin growth creates new demand for Treasury bills. A Brookings Institution paper from Nellie Liang, former undersecretary for domestic finance at the US Treasury, addresses the Treasury market and outlines that the impact depends on where the money comes from. Funds shifting from money market funds or currency are roughly a wash, since those already sit in Treasuries. Funds drawn from bank deposits or from abroad are different. In a high-growth scenario, she estimated stablecoins could generate about $2.4tn of Treasury demand, roughly the size of US’s annual deficit. But there are trade-offs: more short-dated rollover, greater interest-cost volatility and private firms capturing the seigniorage that would otherwise flow to the Federal Reserve and the Treasury. 

Deposit flight 

On stablecoin yield, participants took a measured view. Community bank concerns about deposit flight are valid but overstated, a more pressing impact is on small business credit than about the banking system broadly. Temporary limits on yield to let the system adjust is one option. Regardless of which ‘camp’ one sits on it is undeniable that stablecoins have pushed banks to modernise payments, which those on both sides can ultimately agree on.  

The conversation with the key stakeholders then widened, surfacing several broader questions that need attention. Prudential design will matter enormously. The capital treatment of uninsured bank deposits that may back stablecoin reserves could ultimately determine whether corporate treasurers view these instruments as credible settlement assets. A 2% charge on uninsured deposits alone may be manageable; extending that charge across all reserve assets could be far more consequential. At the same time, meaningful progress is taking place outside legislation, with developments in cash-equivalence treatment for accounting purposes, simplified tax reporting and bank capital rules all beginning to shape the market.  

Tokenised deposits and stablecoins should also be viewed as complementary rather than competing technologies: both have the potential to strengthen reserve management and liquidity, although one participant cautioned that tokenised deposits could accelerate runs, while another stressed that ‘deposit’ is a legal term with insurance implications and should not be used loosely.  

There was also a strong argument for regulating standards rather than chains, regulators should focus on clearly defined outcomes – such as identity vetting for large transactions, operational resilience, protection against consensus attacks and preventing fee leakage to sanctioned actors –  rather than endorsing any particular blockchain architecture. The discussion also highlighted the global spillovers of these developments. Responses abroad range from embracing greater dollarisation to actively resisting it, and participants pointed to the reciprocity provisions in Genius as a potential diplomatic tool, while noting that demand for dollars outside the US ultimately cannot be compelled either by or against any government.  

Agentic AI 

The rise of the use of artificial intelligence and agentic payments introduces another dimension to the debate, particularly around recourse. Do agentic payments compromise the rights of the payer? If they find that an agent has purchased something they don’t want, and return it, will they be able to do so? If merchants find that agentic payments are generating a higher rate of returns than human payments, will they continue to accept them, particularly if the transactions are low value? Emerging open standards are attempting to address that challenge by embedding obligations and recourse directly into the transaction itself.  

Finally, insurance may be the next frontier. Despite the sector’s trillions of dollars in premiums and its growing exposure to private credit, it has so far played a surprisingly limited role in the stablecoin and tokenisation debate. The roundtable’s consensus was that the future of digital assets in the US will be built less by a single landmark statute than by regulators setting clear standards, banks and non-banks competing to modernise payments, and settlement infrastructure catching up with the technology. The harder questions now are about operational resilience, illicit finance, capital design and global coordination. None of them waited for Clarity, and none will be solved for it. 

Folusho Olutosin is Commercial Director, Digital Monetary Institute at OMFIF.

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