ONE of the most consequential policy shifts in modern banking is coming soon.

Known as the Clarity Act (shorthand for Digital Asset Market Clarity Act), it will reshape everyday banking in the United States with a national framework for crypto market structure, and follows up on the Guiding and Establishing National Innovation for US Stablecoins Act (Genius Act) which legalised stablecoins.

If passed into law, crypto platforms will be elevated as a legitimate shadow banking system and blur the lines between them and conventional banks.

But critics fear this will “cross the Rubicon” to the point of no return, with a global spillover impact, for better or worse.

At the crux of it all is deposit-taking, which has long been the sacred cow of banking.

Crypto platforms are encroaching into this as they pay annual percentage yields (APY) on stablecoin balances like interest-bearing fixed deposits (FD).

The APY is often higher than FD rates because it isn’t set by monetary policy and can be funded by de facto lending activities.

Clarity will allow such APY so long as it’s positioned as “rewards” or “incentives” for usage or loyalty, instead of passively earned interest.

Not surprisingly, US banks are up in arms as this could trigger a massive flight of deposits (from US$300bil currently to US$4 trillion in the coming years, per McKinsey estimates) into stablecoin holdings and drive up funding costs.

Consumer advocates also worry, for good reasons.

One, the public would compare headline yields blindly and confuse them with government-insured deposits.

Two, they’d be placing their savings into non-bank financial institutions which don’t enforce the same compliance standards as banks. And three, these products will be exempted from securities registration and overseen by a less stringent commodities regulator.

Tensions have come to a head as crypto lobbyists donated over US$500mil in this election cycle, 11 times more to Republicans who control Congress than Democrats, effectively turning lawmakers into crypto evangelists.

During the heat of it, JPMorgan’s chief executive officer (CEO) publicly slammed Coinbase’s CEO as “full of sh*t”!

When this kind of money is thrown into politics, it usually means one thing – the commercial stakes are too high to ignore.

This is the endgame that Big Crypto (the sector’s oligarchs) has been aiming for years, and the holy grail is finally within reach.

To be clear, Big Crypto (with footprints in over 100 countries) poses a more direct and serious competitive threat than the incursion by Big Tech.

They are busy integrating vertically, from monoline licences (trading or custody) into core banking services (deposit, payment, and lending).

This strategy tracks, since they already operate their own global transfer networks that can move private stablecoins like synthetic money.

Neobanks seem so junior league in comparison.

Post-Clarity, your crypto wallet is merged with a banking account for instant conversion and on/off ramping; while you trade tokenised stocks, originate crypto-backed loans, and build bespoke portfolios like “Money Legos” – all in one superapp!

Is this the new dawn of “banking without banks”?

Or as Binance Research (2026) proclaims, “A structural transformation where the historically distinct paradigms of traditional, centralised and decentralised finance are converging.”

Obviously, banks have a very different take.

Seen through the lens of the Basel Committee on Banking Supervision forward-looking financial technology or fintech model (2018), the banking value chain after Clarity won’t just be more “distributed”, it could be “relegated” as well.

This means that as Big Crypto starts controlling the customer-facing layer, services will fragment further with banks pushed deeper into the background – providing regulated infrastructure without owning the customer relationship.

National regulators would have to test their financial systems for leakage.

Exchange controls may be tight enough but capital borders are porous, especially with foreign-exchange linkages to the crypto ecosystem.

And if group-wide supervision of Big Tech is hard, it’d get a lot harder with Big Crypto, which serves outside the banking perimeter and distribution model.

Our banks might choose to sit this out, but they’re fighting back stateside!

They’re developing crypto-adjacent products with their own clearing house as a defensive “flank” strategy (tokenised deposits being the strongest example) and flexing their large market share to protect cheap funding bases.

To win, banks don’t have to be crypto- native, but must be crypto-compatible to fight fire with fire.

They must deliver better experience, product composability, and network effects like a zero-sum tech race.

And they’re cautiously optimistic: Remember fintech’s grand ambition to disrupt banks?

After three decades of trying, it still musters only 4% of global financial services revenue, according to the Boston Consulting Group (2026)!

Now crypto wants to succeed where fintech missed, not by nibbling at the edges but going for the jugular, with a full-on architecture to challenge banking and the Clarity power play to rewrite the industry’s rulebook – because innovation alone won’t get to the finish line!

As for the rest of us, let’s just relax and enjoy being courted. Whatever happens to the market, customers are the ultimate prize everyone’s after.

Edmund Yong is a director of the Generative AI Association of Malaysia and ambassador of the Global Blockchain Business Council founded in Davos. The views expressed here are the writer’s own.