Regulatory Analysis
Bank Digital Asset Permissibility
Title IV — Responsible Banking Innovation
Digital Asset Market
Clarity Act
Sections 401–404
January 2026
Executive Summary
Title IV grants banks and credit unions explicit statutory authority for 14 enumerated digital asset activities without new approval requirements. Financial holding companies, national banks, insured state banks, and credit unions may offer custody, staking, lending, trading, and market-making services using existing banking law frameworks. §402 mandates joint SEC/CFTC portfolio margining rules across securities, swaps, futures, and digital commodities. §403 requires banking regulators to develop capital rules for cross-product netting within 360 days. §404 prohibits interest payments solely for holding stablecoins but permits activity-based rewards. NFTs explicitly excluded [§401(j)].
1
Entity Coverage
§401(b) — Financial Holding Companies
All 14 activities designated "financial in nature" under Bank Holding Company Act §4(k) [12 USC 1843(k)]. May use digital assets or DLT to deliver any authorized activity.
§401(c) — National Banks
Activities (1)–(5) and (7)–(14) authorized as "business of banking" under Seventh paragraph of 12 USC 24. Activity (6)—principal trading—excluded for national banks.
§401(d)–(f) — State Banks & Credit Unions
Insured state banks: parity with national banks [12 USC 1831a]. Federal/insured credit unions: all 14 activities authorized as incidental to credit union business [12 USC 1757(17)].
Key Limitations
• NFTs explicitly excluded from all Title IV authorities [§401(j)]
• Existing securities/derivatives registration requirements preserved [§401(b)(3), (c)(3)]
• Regulators retain unsafe/unsound enforcement authority [§401(i)(4)]
2
14 Permitted Activities [§401(g)]
(1)Custody, fiduciary, safekeeping
(2)Staking, lending facilitation, governance
(3)Customer buy/sell facilitation
(4)Crypto-collateralized loans
(5)Payment activities
(6)Principal trading/investment*
(7)Operating blockchain nodes
(8)Self-custody wallet software
(9)Derivatives and hedging
(10)Brokerage, clearing, execution
(11)Riskless principal transactions
(12)Incidental principal holdings
(13)Underwriting, dealing, market-making
(14)All incidental powers for (1)–(13)
*Activity (6) authorized for FHCs and credit unions only; excluded from national bank "business of banking" designation [§401(c)(2)]
3
Stablecoin Rewards Framework [§404]
Prohibited [§404(b)(1), (c)]
Interest or yield solely for holding payment stablecoin
Representing stablecoin as deposit or FDIC-insured
Claiming compensation paid by stablecoin issuer
Describing rewards as "risk-free" or bank-deposit-comparable
Marketing rewards without required disclosures
Omitting material information in reward marketing
Permitted Activity-Based Rewards [§404(b)(2)]
(A) Transaction, payment, transfer, conversion, settlement
(B) Wallet, platform, application, protocol usage
(C) Loyalty, promotional, subscription programs
(D) Merchant acceptance rebates and incentives
(E) Liquidity provision and collateral rewards
(F) Governance, validation, staking participation
4
Regulatory Mandates
| Section | Regulator(s) | Requirement | Deadline |
|---|---|---|---|
| §402 | SEC + CFTC (joint) | Portfolio margining rules for securities, swaps, futures, digital commodities; must address bankruptcy treatment and customer disclosures | NO FIXED DEADLINE |
| §403 | Fed + OCC + FDIC | Risk-based and leverage capital requirements for netting agreements providing termination and close-out across multiple transaction types | 360 DAYS |
| §404(d) | SEC + CFTC (joint) | Plain-English disclosure rules for stablecoin compensation; must identify payor, activities, material terms; state not FDIC-insured | 360 DAYS |
| §404(e) | Fed + OCC + FDIC | Report analyzing stablecoin reward effects on bank deposits, community bank outflows, consumer credit access, payment costs | 2 YEARS |
5
Implementation Timeline
360
Days Post-Enactment
§905 General effective date for Title IV provisions
360
Days Post-Enactment
§403 Capital requirements for netting agreements
360
Days Post-Enactment
§404(d) Stablecoin reward disclosure rules
2 Yr
Post-Enactment
§404(e) Deposit outflow impact report
6
Pending Amendments Affecting Title IV
Amd. 14, 15, 16 (Alsobrooks-Tillis)
Expands "Appropriate Regulators" definition in §404(a); refines permissible activities in §404(b)(2); adds anti-evasion language; refines reporting requirements
Amd. 27 (Blunt Rochester)
Yield prohibition—strengthens restrictions on stablecoin interest payments
Amd. 31 (Blunt Rochester)
Bank permissibility—modifies scope of authorized digital asset activities
Amd. 34 (Hagerty)
Strikes Section 404 entirely—removes stablecoin reward framework
Amd. 81 (Warren)
Strikes Sections 401, 402, and 403—removes bank permissibility, portfolio margining, and capital requirements
Amd. 83 (Warren)
Replaces §404 to prohibit all yield or interest on stablecoins including activity-based rewards
Amd. 125, 126, 127 (Tillis-Alsobrooks)
Strikes term "solely" in §404(b)(1); expands regulator definitions; refines §404(e) reporting and adds risk guidance requirement
Amd. 137 (Scott)
Modifies heading of Section 404
Cross-Reference: §701
Bankruptcy protections—digital commodities treated as customer property in stockbroker liquidation proceedings