Bank Pressure Clouds Clarity Act Timeline
Lobbying campaign led by bank trade groups could push a markup of crypto market structure legislation to May
Welcome to the Monday edition of the Crypto In America newsletter!
What you’ll read: A critical week for the Clarity Act as a markup date comes into focus; a new multi-million-dollar DeFi hack adds to the growing list of exploits this month; plus, what to watch this week and the headlines you may have missed.
We’re entering a pivotal week for Clarity Act negotiations that could determine whether the bill receives a long awaited markup this month or gets pushed to May.
State of play: Early this week, Senate Banking Committee members will be preoccupied with the nomination hearing of Kevin Warsh, the man President Trump has tapped to replace outgoing Fed Chair Jerome Powell.
Warsh, one of the wealthiest nominees for the role with over $100 million in assets and significant exposure to crypto firms, is set to take the hot seat Tuesday morning.
After that, the committee has until Friday to notice a markup of the Clarity Act if it plans to hold a vote the week of April 27. But mounting pressure from banks that want to weigh in on the current stablecoin yield situation, combined with Sen. Thom Tillis’ (R-NC) desire to hear them out, could potentially push a markup to the second week of May, when the Senate returns from recess.
As Crypto In America reported over the weekend, Senator Tillis’ office is being hit with a targeted pressure campaign from banking groups like the North Carolina Bankers Association. The groups are unhappy with the scope of the stablecoin yield restrictions in the current draft of the Act, and are urging members to call in and make that clear to Tillis’ staff.
Punchbowl News reported that industry groups have been reaching out to other members of the Banking Committee beyond Tillis and Angela Alsobrooks (D-MD), the lead negotiators on the issue.
The frenzied outreach follows more than two and a half months of negotiations between crypto firms and banks. A compromise was reached late last month that the crypto industry appears largely satisfied with, or at least not openly opposing.
The text has not been released publicly and was instead shown to a small group of banking and crypto representatives. While the banking side was largely mum after those meetings, calls for changes have grown louder in recent days following the release of the White House Council of Economic Advisers report on stablecoin yield, which downplayed risks to the banking system.
With a markup now coming down to the wire, tensions between the two sides and those facilitating the process are rising.
“Small banks across the country are not well served by Washington trade associations letting perfect be the enemy of the good,” said a source familiar with the compromise who spoke on condition of anonymity. “The banking lobby can take the win and limit deposit flight for their members or seize defeat from the jaws of victory and be left with the status quo.”
White House Crypto Council Executive Director Patrick Witt took aim at banks on X, saying it was “hard to explain any further lobbying on this issue as motivated by anything other than greed or ignorance.”
Last week, Tillis floated a so-called “crypto palooza” – an in-person meeting between bank and crypto experts together with senators, instead of staff, to resolve remaining issues. It’s unclear whether he plans to go that route, as it would likely add time to a process many want to see wrapped up.
“We’ve got some open switches that may require some more negotiation, but I’m optimistic that we’re gonna be able to schedule a markup in the coming weeks,” Tillis said.
Yield aside, a couple of other issues, like ethics and provisions around DeFi, still need to be resolved before the bill can be put to a vote.
The question is when. All eyes on this week.
$290M Kelp DAO Hack Triggers DeFi Liquidity Crunch
Another nine-figure hack is sending shockwaves across the DeFi ecosystem.
Saturday’s roughly $290 million exploit at Kelp DAO, a DeFi project built on Ethereum that focuses on liquid restaking, triggered a broader liquidity crunch across the DeFi landscape, including at the largest lending protocol, Aave.
A post mortem of the attack by various onchain sleuths revealed that the attackers likely used an exploited cross-chain bridge to borrow funds on Aave, pushing one of its key lending pool’s utilization to 100% and crowding out lenders, leaving them struggling to withdraw. Aave froze the affected markets, and Kelp DAO paused its rsETH contracts while it investigated.
Since the attack, Aave has seen billions in outflows, and some users have been borrowing stablecoins against deposits, putting further pressure on liquidity, with Aave’s token AAVE dropping roughly 1% to $90. The incident has also triggered wider DeFi withdrawals at protocols not directly affected by the hack, sparking concerns of contagion.
LayerZero, the infrastructure underlying Kelp DAO, said it believes North Korea’s Lazarus Group is likely responsible for the hack.
Alongside Kelp DAO’s hack, last weekend also saw web infrastructure provider Vercel disclosing a security breach that may have exposed customer API keys, forcing some crypto applications to reset credentials. These follow a $285 million hack at Drift Protocol earlier this month, alongside a wave of smaller breaches at CoW Swap, Zerion, Rhea Finance, and Silo Finance. Together, they’ve made April one of the worst months for hacks on record.
Meanwhile, lawmakers in Washington are trying to figure out how to police illicit finance in DeFi markets under the Clarity Act, a growing flashpoint made more complicated by the scale of recent hacks.
👀 What To Watch This Week
Tuesday
8:30 a.m.: The Commerce Department publishes its latest retail sales figures.
10:00 a.m.: Federal Reserve Chair candidate Kevin Warsh appears before the Senate Banking Committee for his nomination hearing.
2:30 p.m.: Federal Reserve Governor Christopher Waller gives a speech on “Modernizing Reserve Bank Operations” at Brookings Institution.
Wednesday
Tesla and CME Group report earnings before the opening bell.
10:00 a.m.: Treasury Secretary Scott Bessent appears before a Senate Appropriations Committee.
Thursday
Nasdaq reports earnings before the opening bell.
Friday
10:00 a.m.: The University of Michigan releases its final April consumer sentiment number.
Weekend News Flash
ICYMI: The biggest headlines from Friday and the weekend.
The SEC has launched a new podcast called Material Matters, hosted by SEC Chairman Paul Atkins, that dives into the agency’s policy and rulemaking agenda, including crypto.
Bitcoin is holding above $75,000, after rising above $78,000 on Friday, then falling under $74,000 over the weekend following geopolitical trends.
Trump-backed World Liberty Financial is facing more scrutiny from investors following a controversial governance proposal that would extend token lockups for early investors by up to four years. Anyone who disagrees with the proposal may be subject to their tokens being locked indefinitely.
X’s Head of Product says its cashtag trading pilot for stocks and crypto generated volumes of about $1 billion since the feature launched last week.
Offshore decentralized exchange Hyperliquid generated $78 million in revenue per employee in 2025, making it the most productive company in the world, outstripping Tether and Anthropic, per data analytics firm Artemis.
Kraken’s parent company Payward has agreed to acquire CFTC-regulated exchange Bitnomial in a $550 million deal to expand its crypto derivatives platform in the U.S.
Wall Street brokerage giant Charles Schwab announced a phased rollout of its bitcoin and ethereum trading platform, Schwab Crypto, to customers in the coming weeks.
Tether is partnering with Drift protocol, giving them $127.5 million in funding to reimburse users and help stabilize the platform following the $280 million hack earlier this month. In return, Drift will make USDT its primary settlement layer going forward, instead of USDC.
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