Crypto Bill Hits New Impasse as Banks Reject White House Stablecoin Compromise

TLDR:

• Banks rejected the White House compromise on stablecoin rewards, stalling the Clarity Act negotiations once again. 
• Standard Chartered warned stablecoins could pull nearly $500 billion from U.S. bank deposits by end of 2028. 
• Trump publicly accused banks of trying to undermine his crypto agenda via Truth Social on Tuesday evening. 
• Industry leaders warn that missing a July deadline could close the legislative window until after the midterm elections.

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The crypto bill aimed at regulating digital assets has hit a new roadblock in Washington. Banks have rejected a White House compromise, stalling the Clarity Act.

President Donald Trump publicly criticized lenders for opposing the deal. Crypto firms have since accepted the proposed terms.

With midterm elections approaching, the window for passing legislation is narrowing fast. Industry insiders warn that failure to act soon could set back digital asset reform for years.

Banks Oppose Key Provisions of the Clarity Act

The Clarity Act seeks to define when crypto tokens qualify as securities or commodities. Crypto companies have operated in a gray area that executives say has stymied growth.

The crypto bill is seen as essential for wider digital asset adoption. Without it, major crypto firms say they cannot properly scale.

A central dispute involves a provision allowing crypto firms to offer yield-bearing rewards. Banks argue these incentives could drive deposit flight from traditional lenders.

Standard Chartered estimated stablecoins could pull $500 billion from U.S. banks by 2028. Coinbase says barring rewards would be anticompetitive.

The White House stepped in last month to broker a deal. Its proposal allows stablecoin rewards only for peer-to-peer payments. Rewards on idle holdings would remain barred.

Crypto companies, including Coinbase and Ripple, accepted these revised terms. Banks, however, said they still cannot support the compromise.

On Tuesday, Trump addressed the standoff on Truth Social. “We are not going to allow them to undermine our powerful Crypto Agenda,” he posted.

Banking groups, including the ABA, countered with alternative proposals. They want to further limit which activities qualify for reward programs.

Some senators are backing banks, believing they can negotiate better terms. That support has emboldened lenders to hold their current position. This division makes passing the crypto bill considerably harder.

The Senate Banking Committee controls the bill’s text but offered no comment. Talks continue, though both sides remain far apart.

Midterm Elections Create a Tight Deadline for Crypto Reform

Beyond the banking dispute, the crypto bill faces other obstacles in the Senate. Some Democrats want to ban elected officials from profiting through crypto ventures.

That provision targets Trump’s World Liberty Financial project directly. Trump is unlikely to sign any bill with such language. Democrats remain more divided on overhauling crypto rules.

Other senators are pushing for tighter anti-money laundering provisions. The Senate Agriculture Committee has its own draft that must be reconciled.

After that, floor time must be secured for a vote. Foreign policy issues, including the war in Iran, are crowding the calendar. Housing policy reform is further competing for Senate attention.

Meanwhile, last year’s stablecoin law banned issuers from paying interest directly. Banks say it created a loophole allowing crypto exchanges to still offer rewards.

The Clarity Act was partly designed to close that gap. Both sides, however, remain divided on defining permissible reward activity. Bridging that gap has proven harder than either side anticipated.

Adrian Wall of the Digital Sovereignty Alliance set a clear timeline. “If this doesn’t get passed… by July… that window will have been closed,” he said.

The crypto industry spent over $119 million backing pro-crypto candidates in 2024. As a result, those investments now hang in the balance.

Summer Mersinger of the Blockchain Association maintained measured optimism. She said “the path to a workable agreement is clearer than it was a month ago.”

Both sides are still engaged, but no deal has been reached. Should the crypto bill fail this year, the next chance may come only after the midterms.

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