The CLARITY Act has again faced another setback as banking groups are now raising fresh concerns over the latest stablecoin yield text, making a deal unlikely anytime soon. White House crypto advisor Patrick Witt reacted to this development, calling out the banking industry for stalling the crypto bill.
CLARITY Act Faces Setback as Banking Groups Push Back Against Latest Draft
According to a Punchbowl report, banking groups have begun circulating concerns about the latest draft of the CLARITY Act to Republican and Democratic senators on the Senate Banking Committee. This follows an earlier pushback by these banking groups against the White House stablecoin yield report.
Earlier this week, the American Bankers Association said that the White House report on stablecoin yield focused on the wrong question. The group noted that the focus should be on the risk of stablecoin rewards to bank deposits, not on banking lending.
However, it is worth noting that the White House report by the Council of Economic Advisers (CEA) stated that concerns over the risk that stablecoin yields posed to bank deposits were “quantitatively small.” However, the banking industry argues that stablecoin rewards could lead to trillions of dollars in deposit outflows.
Meanwhile, as CoinGape reported, Senator Thom Tillis has delayed the release of the latest stablecoin yield text in the CLARITY Act as the banking and crypto industries continue to clash over stablecoin rewards. Tillis and Senator Angela Alsobrooks reached a deal with the White House last month over a language text to settle the clash between both parties.
Tillis is now reportedly considering an in-person “Palooza” with banking and crypto stakeholders so both sides can reach a compromise on the stablecoin yield provision. However, Senate offices say they would like to strike a deal before such an event occurs.
White House Crypto Advisor Calls Out Banks
White House crypto advisor Patrick Witt said in an X post that the compromise reached by Senators Tillis and Alsobrooks addresses concerns about deposit flight head-on. “It’s hard to explain any further lobbying by banks on this issue as motivated by anything other than greed or ignorance,” he added.
As such, Witt urged the banking industry to “move on” rather than dwell on the risk of stablecoin rewards to bank deposits. As the clash persists, an April CLARITY Act markup is now highly unlikely, especially with the Senate Banking Committee set to hold the hearing on Fed Chair nominee Kevin Warsh’s confirmation next week.
Meanwhile, optimism over the crypto bill passing this year continues to fade. Crypto traders currently give only a 48% chance that U.S. President Donald Trump will sign the CLARITY Act into law this year, according to Polymarket data. These odds fell from a recent high of 64%, with the latest setback.
