US Crypto Firms Propose Stablecoin Compromise Amid Extreme Market Fear

VADODARA, February 5, 2026 — U.S. cryptocurrency firms have proposed a new compromise on stablecoin rewards, a critical issue in the pending CLARITY Act market structure legislation. According to Bloomberg reporting, the proposal aims to simplify regional bank stablecoin issuance while mandating reserve deposits with those banks. This latest crypto news emerges as Bitcoin trades at $72,851, down 3.77% amid extreme market fear.

Investigation: The CLARITY Act Compromise Proposal

Bloomberg's report reveals specific compromise details. Crypto firms propose allowing regional banks to issue stablecoins directly with simplified processes. They also suggest mandating that stablecoin issuers deposit a portion of reserves with these banks. This addresses banking industry concerns about customer fund outflows.

Market structure suggests this represents a significant concession from crypto firms. The banking sector fears exchanges like Coinbase offering stablecoin rewards could harm traditional banks. Negotiations continue at the White House and in Congress. U.S. Senate Banking Committee Chairman Tim Scott expressed optimism about finding balance.

A private Senate Democrat meeting reportedly yielded positive signals. However, no final agreement exists. On-chain data indicates stablecoin market capitalization exceeds $160 billion, making this legislation critical for systemic risk management.

Market Context & Historical Precedent

Historically, regulatory uncertainty creates market volatility. The 2021 infrastructure bill debate triggered similar price dislocations. In contrast, the 2024 Bitcoin ETF approvals demonstrated regulatory clarity's bullish impact. This CLARITY Act represents the next major regulatory milestone.

Underlying this trend is a fundamental conflict. Traditional banking seeks to protect deposit bases. Crypto firms aim to innovate payment systems. The compromise attempts to bridge this divide through reserve requirements and bank partnerships.

Related regulatory developments include recent Senate Democrat progress signals and CFTC's market-friendly shift on political betting. These suggest a broader regulatory recalibration despite extreme fear sentiment.

Technical Architecture & Price Action

Market structure suggests regulatory news creates order blocks at key psychological levels. Bitcoin currently tests the $72,000 support zone. This aligns with the 0.618 Fibonacci retracement from the recent $85,000 all-time high.

The 50-day moving average at $74,200 provides immediate resistance. A break above this level would fill the fair value gap created by yesterday's selloff. Conversely, failure at $70,000 could trigger a liquidity grab toward $68,500.

Volume profile analysis shows high concentration between $70,000 and $75,000. This creates a high-volume node that will determine short-term direction. The extreme fear reading of 12/100 suggests capitulation may be nearing, potentially creating a contrarian buying opportunity.

By The Numbers

Why It Matters

This legislation matters for institutional adoption cycles. Clear stablecoin rules would enable traditional finance integration. According to the Federal Reserve's recent payments study, stablecoins represent the fastest-growing payment innovation. Regulatory clarity could accelerate this trend.

Market structure suggests reserve requirements could create new banking revenue streams. This might offset potential deposit outflows. The compromise represents a pragmatic middle ground between innovation and stability concerns.

Historical cycles show regulatory clarity precedes institutional capital inflows. The 2024 ETF approval triggered $30 billion in net inflows. Similar dynamics could emerge with stablecoin legislation, particularly for payment-focused applications.

Expert Commentary

"The compromise attempts to balance banking stability with crypto innovation through reserve requirements. Market structure suggests this could create a new regulatory paradigm for digital assets. However, the devil remains in implementation details and enforcement consistency." — CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Market structure suggests two primary scenarios based on regulatory outcomes and technical levels.

• Bullish Invalidation Level: $76,500. A break above this resistance would confirm regulatory optimism is outweighing fear sentiment, potentially targeting the $80,000 psychological level.
• Bearish Invalidation Level: $69,800. A break below this support would indicate regulatory uncertainty is driving further deleveraging, potentially testing the $65,000 volume node.

The 12-month outlook depends on CLARITY Act passage. Successful legislation could trigger a re-rating of crypto valuations similar to the 2024 ETF impact. Failure could extend the current consolidation phase. Market structure suggests the compromise represents progress, but implementation risks remain.