US crypto legislation has hit a fresh obstacle. The Clarity Act, which had been expected to advance this month, may now be delayed until May after traditional banking groups pushed back against provisions tied to stablecoin yield restrictions, according to Crypto In America. At the same time, DeFi was shaken by a major security breach: Kelp DAO lost $290 million in a hack, with the fallout spreading into Aave.
Bank lobbying adds pressure to the legislative timetable
The report said the Senate Banking Committee is focused this week on the hearing for Kevin Warsh, the nominee set to succeed Federal Reserve Chair Jerome Powell. Warsh, described as having a fortune exceeding $100 million and notable crypto exposure, is expected to face questions from lawmakers.
Outside the hearing room, bank lobbying has intensified. Traditional finance groups, including the North Carolina Bankers Association, objected to the bill’s restrictions related to stablecoin yield, arguing that the measure could accelerate deposit outflows. The report said pressure is being directed at key negotiators Thom Tillis and Angela Alsobrooks.
Patrick Witt, executive director of the White House crypto council, attacked that lobbying effort on X, saying it was hard to explain the campaign as anything other than “greed” or “ignorance.” In an attempt to break the deadlock, Tillis proposed an in-person meeting dubbed “crypto palooza,” where banking representatives and crypto specialists could speak directly. That step, though, could push the markup process back even more.
Kelp DAO exploit triggered liquidity stress in Aave
While Washington argued over regulation, the market was dealing with another large exploit. Based on the source material, Kelp DAO suffered losses of $290 million. On-chain investigators said the attacker exploited a cross-chain bridge vulnerability and borrowed heavily on Aave, driving utilization in a specific lending pool to 100%. That left legitimate depositors unable to withdraw funds.
The damage moved quickly across the market. Aave froze the affected market and $AAVE fell. Protocols that were not directly hit also saw capital leave, as concerns over liquidity contagion spread. LayerZero, which underpins Kelp DAO infrastructure, said North Korean hacking group Lazarus Group was highly likely to be behind the attack.
April attacks complicate the DeFi policy debate
The source described April as a month packed with major security failures. Before the Kelp DAO incident, Drift Protocol had already been hit for $285 million. CoW Swap, Zerion, Rhea Finance, and Silo Finance were also named in a string of attacks, while an API key leak at infrastructure provider Vercel affected some crypto applications.
That leaves lawmakers facing two problems at once: building a broader market structure for digital assets while DeFi continues to expose security gaps and illicit finance concerns. For now, the Clarity Act is dealing with pressure from both bank opposition and a deteriorating security backdrop.