Patrick Witt, executive director of the White House Presidential Advisory Committee on Digital Assets, accused major banking trade leaders this week of refusing to attend February meetings meant to resolve the stablecoin rewards dispute in the CLARITY Act. The accusation lands as the Senate Banking Committee prepares to revisit the bill — a markup originally held in May 2025 — and as banks ramp up pressure for tighter restrictions on crypto-backed yield products.
Banks make their case on Capitol Hill
The American Bankers Association has urged bank executives and employees to press senators for stricter limits on stablecoin rewards, warning that the current language could let crypto firms offer reward structures that look a lot like interest on deposit-like products. Banks argue that stablecoin yields would pull customer funds out of traditional deposits, raising funding costs, squeezing margins, and reducing lending capacity. The message is landing on a committee that has already shown itself willing to tighten the bill.
White House counters with economic analysis
The White House's Council of Economic Advisers pushed back with a new estimate: banning stablecoin yield would increase bank lending by about $2.1 billion — roughly 0.02% of total lending — under baseline assumptions. That's a drop in the bucket. Galaxy Research has also weighed in, projecting that stablecoin growth wouldn't simply drain domestic deposits, undercutting the industry's core claim.
The core disagreement: who gets the reserve return?
At the heart of the fight is whether consumers should receive any part of the return from stablecoin reserves — cash, short-term Treasuries, or other liquid instruments. A Senate compromise attempted to draw a line between passive yield and activity-based rewards, aiming to keep stablecoins from becoming direct substitutes for interest-bearing deposits. But that compromise is now under strain, with both sides accusing the other of bad faith.
Witt's public rebuke suggests the White House is done playing nice. The Senate Banking Committee markup, originally set for May 14, 2025, is expected to resume — though a new date hasn't been set. The question is whether the compromise on rewards can hold, or whether the industry will push for a full ban on stablecoin yield. For now, the banking lobby has the floor, but the White House has the microphone.
