A White House digital assets official has condemned the traditional banking industry’s continued opposition to the CLARITY Act’s proposed stablecoin yield compromise.
On April 17, Patrick Witt, the executive director of the White House Presidential Advisory Committee on Digital Assets, accused financial institutions of “greed or ignorance” for their intensified lobbying efforts to block interest-bearing stablecoins in upcoming legislation.
According to him:
“It is difficult to explain that further lobbying by banks on this issue is motivated by anything other than greed or ignorance. Move on.”
US lawmakers make bipartisan compromise on sablecoin proceeds for CLARITY Act
The administration’s unusually sharp rhetoric reflects the growing rift between the White House and Wall Street over the future of the $320 billion stablecoin market.
Over the past year, the White House has made significant efforts to reach a compromise between the banking industry and the crypto sector. However, so far everything has turned out to be a failure.
The latest is Tillis-Alsobrooks’ proposed bipartisan compromise, which would ban passive returns on stablecoin balances while continuing to allow activity-based rewards.
However, professional associations of banks are not mentioned reportedly argue that even this limited framework poses a structural threat to the traditional financial system. As a result, they have expanded their lobbying campaign to target multiple senators on the Senate Banking Committee.
Notably, the bankers, through the American Bankers Association, previously claimed that the CLARITY Act’s stablecoin yield loophole could trigger up to $6.6 trillion in deposit outflows.
However, the banking industry’s dire projections directly contradict the White House data.
A report from the Council of Economic Advisers concluded that a total ban on stablecoin yields would impose a net cost to consumers of $800 million. The report also argued that the “interest rate ban would do very little to protect bank lending, while missing out on the consumer benefits of competitive returns on stablecoin holdings.”
Yet the bankers have dismissed these claims, noting that:
“As yield-paying stablecoins proliferate, households and businesses will have stronger incentives to move money from bank deposits to stablecoins unless Congress bans yield.
Even if total deposits in the banking system remain constant, deposits will be shifted from smaller banks to a smaller group of large institutions, and the share of deposits tied up in stablecoin reserves will erode banks’ overall lending capacity.”
The demand for yield-bearing stablecoins is increasing
The legislative impasse comes against the backdrop of rapid market evolution, with stablecoin holders increasingly seeking yield-bearing assets.
According to Messari factsThe supply of yield-bearing stablecoins has grown fifteen times faster than the broader stablecoin market over the past six months.
Due to the industry’s rapid growth, time is running out for lawmakers to bridge the gap.
Senator Thom Tillis told reporters that his team is still going back and forth on the compromise text, while Senator Angela Alsobrooks indicated that a release would likely happen next week.
However, if the Banking Commission fails to bring forward the draft law before the end of April, political realities will make the proposal very unlikely in 2026. Senator Cynthia Lummis has even warned that the bill may not pass until 2030 if a compromise is not reached soon.
Meanwhile, the crypto sector claims that capitulating to banks’ demands will stifle domestic innovation.
Dan Spuller, executive vice president of industry affairs at the Blockchain Association, said:
“Our industry is in the 11th hour of negotiations and the push to force everything into a banking model is real. Stablecoins are fully reserved payment instruments, not depository institutions. If we get this right, America wins.”