Talks over landmark U.S. cryptocurrency legislation have hit a fresh impasse after major banks rejected a compromise brokered by the White House. The stalemate has drawn criticism from President Donald Trump, who accused financial institutions of trying to undermine the effort. Trump, whose family is well invested in digital assets and bitcoin, posted on Truth Social that banks “need to make a good deal with the Crypto Industry” to advance legislation that he says is in the public interest. The stalled legislation, known as the CLARITY Act, follows last year’s GENIUS Act, which created the first federal framework for stablecoin issuers.
Supporters of the CLARITY Act argue it is needed to provide clarity for cryptocurrency firms, which have been operating in a regulatory gray area that executives say has stymied growth and innovation. The bill would give a defined regulatory framework over digital assets, potentially accelerating adoption across the financial system. The core dispute involves whether crypto exchanges should be allowed to offer yield-bearing rewards on stablecoins, digital tokens designed to maintain a $1 value. Banks warn that allowing such yields could siphon deposits from traditional bank accounts, threatening lending operations that are central to the economy.
Financial institutions are pushing for a ban on stablecoin yield payments as part of the legislation, citing risks to financial stability. Crypto firms, including Coinbase, counter that restrictions on rewards programs would be anticompetitive and stifle innovation. Stablecoins, they argue, must be able to offer incentives to attract customers. Analysts estimate that by 2028, stablecoins could divert up to $500 billion in deposits away from U.S. banks.
In January, the Senate Banking Committee postponed a scheduled markup of the bill after amendments limiting stablecoin rewards were introduced, leaving the legislation stalled. The White House has attempted to mediate the conflict, with a compromise that would permit stablecoin rewards in limited circumstances, such as peer-to-peer payments, but not on idle holdings. Crypto companies have signaled willingness to accept this compromise, while banks have maintained opposition, arguing that even these limited rewards could trigger deposit flight. Some senators support the banks’ position, believing it could strengthen their negotiating leverage.
JPMorgan Chase CEO Jamie Dimon has called for stablecoin yield programs to be regulated under bank-like rules to ensure a level playing field. Meanwhile, President Trump has framed the issue as fairness for consumers, writing that Americans should earn more money on their money and describing the CLARITY Act as essential to maintaining the United States’ global leadership in cryptocurrency. Trump’s engagement with the crypto sector extends beyond social media; he met privately with Coinbase CEO Brian Armstrong, aligning publicly with Coinbase’s position against the banking industry’s restrictions. It remains unclear whether the meeting was a formal sit-down or part of broader discussions with industry representatives.
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