The White House is moving to mediate a growing clash between banks and crypto platforms. On Monday, crypto czar David Sacks is set to gather major banking and crypto trade groups, including Coinbase, for talks on possible rounds of policy negotiations.
The immediate flashpoint is whether crypto platforms should be allowed to pay customers yield, or interest, on stablecoin balances. Cody Carbone, chief executive of The Digital Chamber, said the broader issue is building a foundational regulatory framework for crypto in the United States. At the same time, he said the debate over stablecoin rewards has now overtaken the bill itself.
The bill aims to split federal oversight across crypto markets
The legislation, known as the Clarity Act, is designed to define which federal agencies would regulate different parts of the crypto market. That scope includes traditional digital assets, DeFi products, and tokens linked to real-world assets such as stocks or bonds. If adopted, the framework could give the industry a more permanent footing in US regulation and open the door for banks to expand their crypto activity.
Its progress in the Senate remains fragile. A portion of the bill recently cleared the Senate Agriculture Committee by a narrow 12-11 vote. TD Cowen analyst Jaret Seiberg said the effort is “not a sustainable strategy” without support from 10 Democrats. The margin is thin, and that leaves little room for setbacks.
Coinbase objects to draft changes, bank chiefs push back
After meetings with leading bank CEOs in December, the Senate Banking Committee pushed its markup hearing on the bill to January. Since then, that hearing has been delayed twice. The timetable has slipped even as tensions have become more public.
Coinbase chief executive Brian Armstrong rejected the latest draft of the bill, arguing that amendments “would kill rewards on stablecoins” and raising other objections. At the World Economic Forum in Davos, Armstrong discussed the bill’s market structure goals and met major banking leaders. Bank of America CEO Brian Moynihan suggested that Armstrong consider registering as an SEC-regulated money market fund. JPMorgan CEO Jamie Dimon was blunter, accusing Armstrong of misleading the public and attacking him directly.
Election politics and industry splits add pressure
The Clarity Act is also exposed to political timing. With US midterm elections approaching, congressional focus could shift away from the bill, hurting its chances. Crypto political action group Fairshake has raised $193 million for elections, including $25 million from Coinbase.
There is no unified industry position either. Andreessen Horowitz and Ripple CEO Brad Garlinghouse have taken a more cautious view. Patrick Witt from the White House framed the choice in stark terms, saying that even if some in the industry do not like every part of the Clarity Act, they would dislike a future Democratic version even more. The fight around the bill now reflects more than drafting details; it has become a contest over who gets to shape the rules for crypto in Washington.