The room at the Marriott Marquis in Washington was full of community bankers on Tuesday, and Senator Angela Alsobrooks walked straight into the lion's den. Speaking at the American Bankers Association's annual Washington Summit, the Maryland Democrat delivered a message neither side particularly wanted to hear: everyone involved in the Digital Asset Market Clarity Act is going to have to walk away a little bit unhappy.

 

It was a remarkably candid thing to say in front of 1,400 people who have spent the better part of three months trying to kill the very provision that's been holding up the bill. But Alsobrooks, along with Republican Senator Thom Tillis of North Carolina, is now the central figure in a late-stage push to get the Clarity Act off the Senate Banking Committee floor and into an actual markup hearing before the legislative window closes for good.

 

The two senators confirmed Tuesday they're actively working on compromise language around stablecoin yield which keeps coming up as the main issue that has stalled what was supposed to be a landmark piece of crypto regulation.

 

A Bill In Limbo

The Digital Asset Market Clarity Act, or CLARITY Act, was supposed to have its Senate Banking Committee markup in January. That session got pulled at the last minute. The reason was stablecoin yield, specifically, amendments co-sponsored by Alsobrooks and Tillis that would restrict crypto firms from offering interest-like returns to customers who simply hold dollar-pegged digital tokens like USDC or USDT.

 

Banks had been lobbying hard against any provision that allowed that kind of reward. Their argument, which they've pushed loudly and repeatedly, is that stablecoins offering yield would function like bank accounts without the regulatory obligations of bank accounts. Executives at JPMorgan and Bank of America have cited Treasury Department modeling that suggested banks could lose up to $6.6 trillion in deposits if stablecoin yield programs went mainstream. Their argument is that it would starve the lending market and ultimately destabilize smaller regional banks that are particularly dependent on deposit funding.

 

The crypto industry dismisses most of that as fearmongering. Coinbase CEO Brian Armstrong called out the banking lobby publicly for what he characterized as anticompetitive blocking tactics and has pulled his support for the bill. In January at Davos, JPMorgan's Jamie Dimon reportedly told Armstrong he was, in quite colorful terms, wrong. The anecdote leaked out and became something of a symbol for just how personal this fight had gotten.

 

 

The White House Steps In, Then Gets Rejected

By late February, the White House had grown impatient. Administration officials spent weeks brokering what they hoped would be an acceptable middle ground: allow stablecoin yield in limited contexts, particularly for activity tied to payments and transactions, while banning rewards on idle balances that look more like savings accounts. Crypto firms signed off on the framework. The banks did not.

 

On March 3rd, President Trump went public with his frustration. In a Truth Social post, he wrote that banks should not be trying to undercut the GENIUS Act or hold the CLARITY Act hostage, a shot across the bow that was notable both for its directness and for the fact that it did essentially nothing to move the American Bankers Association. Two days later, the ABA formally rejected the White House compromise anyway.

 

The March 1st deadline the White House had set for a resolution passed without published compromise text. Prediction markets, which had briefly priced Clarity Act passage at around 80% odds, fell back toward 55% as the stalemate hardened.

 

What the ABA rejection didn't do, however, is kill the legislation outright. Congress has passed bills over banking lobby opposition before. The question, as analysts and lobbyists have been pointing out all week, is whether there are enough Senate votes to do it again — and whether the calendar allows the time to find out.

 

Can We Get A Compromise?

The emerging deal that Alsobrooks and Tillis are proposing is a slimmed-down version of what the White House tried. Under the framework being discussed, yield on stablecoin holdings that closely resemble bank deposits would remain prohibited. But rewards tied to specific activities, like using stablecoins for payments or transactions on a given platform, could remain eligible for some form of customer incentive.

 

Both senators and many crypto advocates actually agree on the premise that pure holding rewards that look and function like savings account interest are a problem. The dispute is over where exactly to draw the line and how to define the categories well enough that neither side can game them after the fact.

 

Cody Carbone, the CEO of the Digital Chamber, said this week that Tillis has been very receptive to discussions about stablecoin yield and that he's optimistic the industry can get to yes on the bill. Summer Mersinger, the CEO of the Blockchain Association, noted that the White House weighing in on the negotiations and pushing banks to engage in good faith adds important momentum as talks continue.

 

The banks have maintained, publicly at least, that those assurances aren't enough. Their representatives at the ABA summit this week underlined again what they see as the risks of any yield loophole to their business model. The question of whether a markup hearing happens in late March or gets delayed again, depends entirely on whether Alsobrooks and Tillis can produce language the committee will actually vote on.

 

Timing Is An Issue

Behind every conversation about the Clarity Act this week is an unspoken anxiety about time. The Senate calendar is tight. Midterm elections are in November, and lawmakers will start dispersing from meaningful legislating sometime around May or June as campaign season accelerates. Unfortunately it seems, Congress prefers to stop working as they try to convince voters to keep them in their jobs. I know, makes perfect sense. If a markup isn't held and a floor vote isn't scheduled by sometime in April, realistically the bill is looking at the next Congress which could be a completely different party in power. And complicating things even more. Despite which party ends up winning the midterms, this could mean another 12 to 18 months of regulatory uncertainty for an industry that has been waiting years for a clear legal framework.

 

That timeline matters not just for the crypto industry's domestic ambitions, but for its competitive positioning globally. Under the European Union's MiCA framework, stablecoin yield products that are restricted or banned in the U.S. are already legal in European jurisdictions. Coinbase and others have been explicit about the risk that continued regulatory ambiguity in the U.S. will push capital, talent, and product development offshore. Trump made a version of the same argument in his Truth Social post last week, warning that failure would drive the industry to China.

 

There's also a strategic Bitcoin Reserve angle sitting quietly in the background. According to people familiar with the situation, the Trump administration has determined it needs congressional action to operationalize the planned Strategic Bitcoin Reserve that the president signed an executive order for over a year ago. That creates at least some White House motivation to see the broader Clarity Act process succeed.

 

What Happens Next

The Senate Banking Committee is targeting a late-March markup. Whether that happens depends on whether the Alsobrooks-Tillis compromise language satisfies enough members to call the vote. If it does, the bill would then need to be merged with a version that already passed the Senate Agriculture Committee on a party-line vote in late 2025. The combined text would require significant Democratic support to clear a full Senate vote, always a tall ask in the current politcal environment and the fact that seven Democratic senators have separately raised concerns about potential conflicts of interest involving senior government officials, including the president himself, who have financial ties to the crypto industry.

 

Even if the Senate acts, the bill still needs the House, where an earlier version of the CLARITY Act passed committee last year but has yet to reach the floor. The path to a signed law before November is narrow but not impossible. It requires the Senate Banking Committee to move in the next few weeks, the combined bill to hold together politically, and a Senate floor schedule that is packed with little wiggle room.

 

For the moment, all of it hinges on two senators and a room full of bankers in Washington D.C., trying to decide how much compromise is actually compromise and if they can all agree to leave a bit unhappy about the results for the greater good. Typically the best compromises do make both sides a bit unhappy. In Washington, that usually means the deal is closer than it looks. It also usually means it's harder than it sounds.

 

 

Washington's stablecoin standoff just got a whole lot more personal.

 

Patrick Witt, the executive director of the President's Council of Advisors for Digital Assets, publicly fired back at JPMorgan Chase CEO Jamie Dimon on Tuesday, calling his arguments about stablecoin yields misleading and, in Witt's own word, a "deceit."

 

The exchange marks one of the sharpest moments yet in a months-long tug-of-war between Wall Street and the White House over the future of digital asset regulation in America.

 

Dimon Draws a Line in the Sand

It started Monday, when Dimon went on CNBC and didn't mince words. His position was simple, if uncompromising: any platform holding customer balances and paying interest on them is functionally a bank, and should be regulated like one.

 

"If you do that, the public will pay. It will get bad," Dimon warned, arguing that a two-tiered system where crypto firms operate with fewer restrictions than banks is unsustainable.

 

Dimon suggested a narrow compromise: platforms could offer rewards tied to transactions. But he drew a clear line at interest-like payments on idle balances, saying, "If you're going to be holding balances and paying interest, that's a bank."

 

The list of obligations Dimon believes should apply is long, FDIC insurance, capital and liquidity requirements, anti-money laundering controls, transparency standards, community lending mandates, and board governance requirements. "If they want to be a bank, so be it," he said.

 

For Dimon, it's fundamentally about fairness. JPMorgan uses blockchain in its own operations, and the CEO was careful to frame his argument not as anti-crypto but as pro-competition on equal terms. "We're in favor of competition. But it's got to be fair and balanced," he said.

 

 

The White House Fires Back

Witt wasn't going to let that stand. In a post on X late Tuesday, he went directly at Dimon's framing, calling it deliberately misleading.

 

"The deceit here is that it is not the paying of yield on a balance per se that necessitates bank-like regulations, but rather the lending out or rehypothecation of the dollars that make up the underlying balance," Witt wrote. "The GENIUS Act explicitly forbids stablecoin issuers from doing the latter."

 

The argument gets at something technically important. What makes a bank risky, and therefore subject to heavy regulation, isn't that it pays interest. It's that banks take deposits and lend them back out, creating credit and the systemic risk that comes with it. If too many people want their money back at once, that's a bank run. Stablecoin issuers operating under the GENIUS Act must maintain reserves at a 1:1 ratio. There is no fractional reserve lending, no rehypothecation, no credit creation.

 

In Witt's view, stablecoin balances aren't deposits, and treating them as such misrepresents what's actually happening. He closed with a pointed equation: "Stablecoins ≠ Deposits."

 

President Donald Trump didn't stay quiet either. On Tuesday, he took to Truth Social with a message that made his position unmistakably clear.

 

"The U.S. needs to get Market Structure done, ASAP. Americans should earn more money on their money. The Banks are hitting record profits, and we are not going to allow them to undermine our powerful Crypto Agenda that will end up going to China, and other Countries if we don't get the Clarity Act taken care of," Trump wrote.

 

Senator Cynthia Lummis quickly reposted Trump's message, adding her own call to action: "America can't afford to wait. Congress must move quickly to pass the Clarity Act."

 

The same day Trump posted, a Coinbase delegation led by CEO Brian Armstrong visited the White House for talks. The timing was not subtle.

 

The Real Stakes: The CLARITY Act

To understand why this debate matters so much right now, you need to understand the legislation being held hostage by it.

 

The GENIUS Act, signed into law in July 2025, established the first federal framework for payment stablecoins. The CLARITY Act is its sequel: a broader market structure bill that would assign clear regulatory jurisdiction to the SEC and CFTC over the crypto industry, and is widely seen as the piece of legislation needed to unlock large-scale institutional participation in digital assets.

 

The bill cleared the House comfortably but has been mired in Senate gridlock since January, when the Senate Banking Committee indefinitely postponed a planned markup vote. The trigger was Coinbase withdrawing support over a proposed amendment that would have restricted stablecoin rewards for users.

 

That withdrawal, announced by CEO Brian Armstrong in a post on X the night before the scheduled committee vote, split the crypto industry. a16z crypto's Chris Dixon publicly disagreed, posting "Now is the time to move the Clarity Act forward." Kraken's co-CEO Arjun Sethi also pushed back, writing that "walking away now would not preserve the status quo in practice" and warning it "would lock in uncertainty and leave American companies operating under ambiguity while the rest of the world moves forward."

 

The stakes for Coinbase are concrete. Stablecoins contribute nearly 20% of Coinbase's revenue, roughly $355 million in the third quarter of 2025 alone, and most of USDC's growth is occurring on Coinbase's platform. Coinbase currently offers 3.5% yield on USDC, a figure most traditional bank accounts can't come close to matching.

 

 

Banks Are Scared, and They Have the Numbers to Show It

The banking lobby's concern isn't hypothetical. Banking trade groups, led by the Bank Policy Institute, have warned that unrestricted stablecoin yield could trigger deposit outflows of up to $6.6 trillion, citing U.S. Treasury Department analysis. Bank of America CEO Brian Moynihan put a similar figure forward, reportedly suggesting as much as $6 trillion in deposits, representing roughly 30-35% of all U.S. commercial bank deposits, could be at risk.

 

Stablecoins registered $33 trillion in transaction volume in 2025, up 72% year-over-year. Bernstein projects total stablecoin supply will reach approximately $420 billion by the end of 2026, with longer-run forecasts from Citi putting the market at up to $4 trillion by 2030. Those aren't niche numbers anymore. At that scale, deposit competition becomes a serious macroeconomic question.

 

The American Bankers Association and 52 state bankers' associations explicitly urged Congress to extend the GENIUS Act's yield prohibitions to partners and affiliates of stablecoin issuers, warning of deposit disintermediation.

 

The Bottom Line

What's playing out right now is a genuine philosophical disagreement about what money is and how it should be regulated, wrapped inside a very consequential legislative fight, a prize fight with Banks in one corner and Crypto in the other.

 

Dimon's argument is not frivolous. Banks are regulated as heavily as they are because of what they do with deposited money, and a world where consumers move trillions into yield-bearing crypto instruments held at lightly regulated platforms carries real risks. The history of financial crises is largely a history of regulatory arbitrage gone wrong.

 

But Witt's counter is also not frivolous. The GENIUS Act was designed specifically to prevent stablecoin issuers from doing the things that make banks dangerous. A fully reserved, non-lending stablecoin issuer is structurally different from a fractional reserve bank, and applying the same regulatory framework to both risks conflating two fundamentally different business models.

 

What's harder to square is that the banking lobby's intervention in the CLARITY Act seems, to many in the crypto world, less about prudential regulation and more about protecting market share. President Trump has not been subtle about that read, accusing banks of holding the CLARITY Act hostage to protect incumbent interests against crypto competition.

 

With the legislative window narrowing, Armstrong back at the White House, and Trump openly calling out the banking lobby by name, this standoff has reached the kind of inflection point where someone is going to have to blink. The question is whether either side is willing to do it before time runs out entirely.

 

 

Coinbase Draws a Line in the Sand on Market Structure Bill

 

Coinbase is stepping back from Washington’s biggest crypto push yet.

Just days before a crucial vote in the Senate Banking Committee, the largest US crypto exchange says it will not support the Senate’s sweeping crypto market structure bill in its current form. The message from Coinbase CEO, Brian Armstrong, is blunt. Regulatory clarity matters, but not at any cost.

The move highlights a growing divide between lawmakers eager to lock in federal rules and an industry increasingly wary of legislation that could reshape its business in unintended ways.

 

A Bill Meant to End the Gray Area

The Senate bill, months in the making, is designed to finally spell out how digital assets are regulated in the United States. At its core, the proposal tries to answer long-standing questions about which crypto assets fall under securities law, which should be treated as commodities, and how oversight should be split between regulators.

For years, crypto companies have complained that the lack of clear rules has pushed innovation offshore and left firms vulnerable to enforcement actions after the fact. On paper, this bill is supposed to fix that.

But as the text has taken shape, it has also picked up provisions that some in the industry see as deal-breakers.

 

Stablecoin Rewards Become the Flashpoint

For Coinbase, the biggest problem sits with stablecoins.

The draft legislation includes language that could sharply limit or effectively eliminate rewards paid to users who hold stablecoins on platforms like Coinbase. These rewards are not technically interest paid by issuers, but incentives offered by exchanges and intermediaries. Still, critics argue they look and feel a lot like bank deposits, without bank-style regulation.

Traditional banking groups have pushed hard for tighter rules here. Their concern is straightforward. If consumers can earn yield on dollar-pegged crypto tokens outside the banking system, deposits could drain from insured banks, particularly smaller ones.

Coinbase sees it differently. Stablecoin rewards have become a meaningful part of how crypto platforms compete and how users engage with dollar-based crypto products. Cutting them off, the company argues, would harm consumers and hand an advantage back to traditional finance.

In private and public conversations, Coinbase executives have made it clear that they are unwilling to back a bill that undercuts what they view as a legitimate and already regulated product.

"After reviewing the Senate Banking draft text over the last 48 hours, Coinbase unfortunately can’t support the bill as written,” Armstrong said. "This version would be materially worse than the current status quo, we'd rather have no bill than a bad bill."

 

Why This Matters Beyond Coinbase

Coinbase’s stance carries weight. It is one of the most politically active crypto companies in Washington and often serves as a bellwether for broader industry sentiment.

If Coinbase is out, others may quietly follow.

That raises the risk that lawmakers end up with a bill that lacks meaningful industry buy-in, or worse, one that passes but leaves key players unhappy enough to challenge or work around it.

Some firms are already exploring alternatives, including banking charters or trust licenses, as a hedge against restrictive federal rules. Others may simply slow US expansion and look overseas.

 

A Narrow Path Forward in the Senate

The timing is not ideal.

The Senate Banking Committee is expected to vote on the bill imminently, but support remains fragile. Lawmakers are divided not just on stablecoins, but also on how to handle decentralized finance, custody rules, and even ethics provisions tied to political exposure to crypto.

Add in election-year politics, and the window for compromise looks tight.

If the bill stalls or fails in committee, there is a real chance it gets pushed into the next Congress. That would mean at least another year, and likely more, of regulatory uncertainty.

 

No Law vs a Bad Law

Behind the scenes, a familiar argument is playing out.

Some in Washington believe that imperfect legislation is better than none at all. The industry, scarred by years of enforcement-first regulation, is no longer convinced.

Coinbase’s decision reflects a growing view among crypto companies that a flawed law could do more long-term damage than continued ambiguity. Once rules are written into statute, they are far harder to undo.

For now, the standoff continues.

 

Whether lawmakers soften the bill to keep major players on board or push ahead regardless may determine not just the fate of this legislation, but the shape of US crypto regulation for years to come.

 

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