Trump Pushes Banks to Strike Crypto Deal, but Analysts Say It Won’t Break CLARITY Act Deadlock

• A social media post on Tuesday by Donald Trump urging banks to make a deal with crypto firms on stablecoin yield won’t be enough to unstick CLARITY Act negotiations, said TD Cowen analyst Jaret Seiberg.
• In an investor note sent Wednesday, Seiberg wrote that Trump must get involved in talks directly to help move the bill forward, but believes that’s unlikely while the Middle East conflict continues.

A recent social media post by US President Donald Trump urging banks to cut a deal with the crypto industry so the CLARITY Act can progress won’t be enough to get the legislation moving again, according to Jaret Seiberg, the managing director at investment bank TD Cowen’s Washington Research Group.

On Tuesday, Trump posted on his social media platform, Truth Social, encouraging banks to come to an agreement with crypto firms for the good of the crypto industry and the broader US economy.

“The Banks should not be trying to undercut The Genius Act, or hold The Clarity Act hostage. They need to make a good deal with the Crypto Industry because that’s what’s in best interest of the American People,” Trump wrote.

However, in an investor note sent out Wednesday, Seiberg said that the post “is not enough” to meaningfully change the situation, adding that the sheer volume of Trump’s social media posting dilutes the impact of any single post. 

We do not see this posting as unsticking the bill.

Jaret Seiberg, TD Cowen Washington Research Group

To make a real impact on negotiations, Seiberg believes Trump needs to get involved in talks directly, but fears the current military conflict in the Middle East may prevent that from happening in the short term.

“To us, it will require the President to directly participate in the negotiations between the banks and the crypto sector,” Seiberg said. “It is hard for us to see that occurring while the United States is in armed conflict with Iran.”

Related:Jamie Dimon Warns Stablecoin Yield Fight Could Threaten US Financial System

CLARITY Act Stalled Over Yield and Conflict of Interest Concerns

The current major hurdle in CLARITY Act negotiations is whether or not stablecoins should be able to generate a yield for holders — the banks argue they shouldn’t, while the crypto firms insist they should. 

Banks fear that if stablecoins can generate yield, then many of their customers will move their funds into stablecoins for the higher yields, draining bank deposits and potentially threatening their business models and creating broader risks to financial stability.

In an investor note sent out Monday, Seiberg told his readers that the banks are likely to eventually lose this fight due to the poor optics of opposing policy that would unequivocally be good for the general public. But he thinks the fight could last long enough to prevent the bill from passing.

To us, the banks will eventually lose on this issue politically as they are arguing against consumers getting paid money. Yet this fight could extend long enough to put CLARITY at risk.

Jaret Seiberg, TD Cowen Washington Research Group

Even if the yield question is resolved, the conflict of interest piece will likely prove the next sticking point. Democrats are keen to include provisions in the bill to restrict government officials — including the president — and their immediate families, from owning crypto businesses. 

Seiberg believes Trump would oppose this measure as he and his family have numerous crypto businesses, such as the DeFi platform World Liberty Financial, which are currently extremely profitable. Seiberg suggests a compromise could be delaying the introduction of conflict of interest measures until Trump leaves office in 2029, however this arrangement seems politically awkward as it appears to explicitly green-light ongoing crypto corruption for the Trump family only while enforcing rules on those who follow.

Related: Next 150 Days Make-Or-Break For Crypto, Says Swyftx Analyst Hundal

If the CLARITY Act is to pass before the November mid-terms where the Democrats look set to take back control of the House of Representatives (making any future passage much more difficult), Seiberg wrote that the deadline is August.

“Our view is that the real deadline for enacting CLARITY is the start of the August recess,” Seiberg said.

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