Washington, D.C. — A legislative impasse over stablecoin rewards has stalled a major cryptocurrency market structure bill, drawing criticism from the White House. The dispute centers on whether crypto platforms can share yield with stablecoin users, a practice traditional banks argue creates an unfair advantage and risks deposit flight.
The White House continues to express disappointment with the banking lobby’s hardline against the crypto market structure bill, the CLARITY Act. The two industries have failed to reach an amicable agreement on stablecoin rewards, which has stalled the bill’s progress since early this year.
At a recent bankers’ summit, the industry maintained its stance, prompting a response from Trump’s crypto advisor, Patrick Witt. Witt said, “The CLARITY Act must remain a pro-innovation piece of legislation. Attempts to hijack the legislative process and turn it into an anti-competition bill are shameful.”
The American Bankers Association president, Rob Nichols, framed the dispute as anti-competitive at the same event. Nichols cautioned, “Our industry welcomes competition and innovation…what we don’t support is an uneven playing field.”
Banks contend that the existing U.S. stablecoin law, the GENIUS Act, contains a loophole allowing intermediaries to bypass a direct reward ban. They seek to extend this ban to intermediaries, either by amending the GENIUS Act or through provisions in the CLARITY Act.
Stablecoin issuers view this as a threat to their business model. Supporters also argue stablecoin yield is a national security issue, citing China’s rewards for its digital yuan.
Lawmakers have attempted to broker a compromise. Senator Angela Alsobrooks stressed that each faction would be ‘just a little bit unhappy’ to achieve clear rules.
A Congressional Research Service report estimates stablecoin yield could reduce bank lending by $65 billion to $1.26 trillion. The report suggested banks could offer higher interest rates to depositors to remain competitive.
The path forward for the CLARITY Act remains uncertain until the stablecoin yield issue is resolved. The White House has criticized the banking industry’s opposition for several days.
