The White House keeps hounding banks over their opposition to stablecoin ‘rewards,’ but bankers say the public supports their view, while Binance is taking a dim legal view of the Wall Street Journal’s reporting.
With the Senate Banking Committee’s digital asset market structure legislation (CLARITY Act) stuck in neutral for nearly two months now, the White House is ratcheting up the pressure on the banking sector to relax its opposition to digital asset platforms offering ‘rewards’ to stablecoin holders.
If you’ve just emerged from a coma, banks oppose allowing platforms like the Coinbase (NASDAQ: COIN) exchange offering ‘rewards’ to customers holding stablecoins on their platforms. The GENIUS Act prohibits stablecoin issuers from offering ‘yield’ to their users, and the banks fear mass deposit flight if non-issuers are allowed to skirt this ban. The platforms say this flight threat isn’t real, and the banks just don’t want to pay decent interest to bank customers. And here we are.
On Tuesday, White House crypto advisor Patrick Witt tweeted the administration’s view that CLARITY “must remain a pro-innovation piece of legislation. Attempts to hijack the legislative process and turn it into an anti-competition bill are shameful.”
On Wednesday, Witt brought the snark, tweeting that his “favorite part” of this debate was “when bankers say ‘if we allow this, then we’ll see massive deposit flight.’ Crypto has already been offering rewards/yield on stablecoins FOR YEARS. Where is the deposit flight? Is it in the room with us right now?”
President Donald Trump waded into this mess last week, blaming banks for CLARITY’s stalled progress (shortly after Coinbase CEO Brian Armstrong met face-to-face with the president). Curiously, or possibly because he didn’t want to make this quid pro quo so blatant, Armstrong waited until March 10 to tweet his thanks to the president.
But Armstrong’s belated tweet was only one plank of a concerted push by Coinbase execs to shape this ‘yield v reward’ narrative. That same day, Coinbase’s chief policy officer, Faryar Shirzad, retweeted Trump’s March 3 post along with a helpful “five things Congress should NOT do to stablecoins if it wants America to accelerate our lead in global finance.” Spoiler alert: they all involve not preventing Coinbase from paying rewards to stablecoin holders.
Also, that same day, Coinbase’s chief legal officer, Paul Grewal, retweeted Witt’s March 10 post, adding that banks were trying to “take rewards out of retail consumers’ pockets and put it into the pockets of the biggest banks on the planet. All to prevent a deposit flight ‘risk’ that lacks any evidence whatsoever. Is that what people elected their Senators to do?”
Some senators, like Banking Committee members Angela Alsobrooks (D-MD) and Thom Tillis (R-NC), have been trying to strike a Solomonic bargain on the rewards issue. The bipartisan pair have proposed banning platforms from paying users for simply holding stablecoins, while allowing rewards for some stablecoin-based ‘activities’ (the parameters of which are proving equally contentious).
Coinbase’s C-suite sermons coincided with the American Bankers Association (ABA) Summit 2026, which saw numerous banking figures equate stablecoin rewards with the Black Death.
Alsobrooks was an invited guest at the summit, where she told attendees that stakeholders on both sides of this debate can’t let “perfect be the enemy of good.” Alsobrooks added that both sides will need to “probably walk away just a little bit unhappy” for CLARITY to move forward.
Smaller community banks have been most vocal on the ‘deposit flight’ threat, fearing it will reduce their capacity to offer new loans to local residents and businesses. On Tuesday, Alsobrooks stressed the importance of not paying balances on idle stablecoin deposits—earning a round of applause from the community bankers in the audience—to minimize the threat of “a shit-ton of deposit flight.”
Alsobrooks earned more applause when she emphasized the need to prevent “bank-like products without bank-like protections.” Alsobrooks urged the audience to continue to make their feelings known to their elected representatives. But in an unwitting preview of Witt’s Wednesday snark, Alsobrooks said the status quo of an “unregulated system” couldn’t continue.
Survey says
Alsobrooks’ appearance came the same day that the ABA released the results of a survey that claims Americans “want nonbank fintech companies to follow the same rules as banks.” This sentiment includes a plurality of respondents who object to crypto firms offering stablecoin rewards to customers.
The survey asked 4,456 U.S. adults a number of questions, including how many currently own stablecoins (10%), how many have ever owned stablecoins (20%), and how many are likely to “buy, hold or use” stablecoins in the next 12 months (17%, of which 5% were ‘very likely’ to do so).
Respondents were also asked if they agreed that “Congress should bar the ability for stablecoin issuers and their affiliates to offer interest and rewards on stablecoin if there is any risk it could reduce the amount of funds available to banks to lend in the community and support economic growth.”
The largest response (43%) was ‘Don’t know,’ followed by ‘somewhat agree’ (24%) and ‘strongly agree’ (18%), making 42% of respondents at least partially opposed to stablecoin rewards.
On the flip side of this equation, only 4% strongly disagreed with the statement, and 11% somewhat disagreed. That put the pro-rewards camp at just 15%, two points fewer than those who said they planned to buy stablecoins over the next year.
The survey also asked the rather generic question of whether Congress “should be cautious and not take any steps that could undermine our existing financial system” when crafting digital asset regulations. Only 10% disagreed with that statement, while a timid 29% claimed not to know whether caution was warranted.
ABA president/CEO Rob Nichols said the results were “clear: Any fintech or crypto company offering bank-like products should be held to the same rigorous standards that apply to banks.” Nichols further claimed that the survey showed “a strong majority” opposed to “the offering of yield-like rewards on stablecoin that threaten to draw away bank deposits that drive local lending.”
Crypto supporters would likely point out that the rewards question frames the issue in terms of the risk of banks losing the ability to lend, something the crypto sector claims is a chimera. Then again, crypto operators are prone to equally self-serving surveys, so maybe chalk all these number up to lies, damned lies and statistics.
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CFTC ‘future proofing’ crypto rules
Meanwhile, the chairmen of America’s dynamic deregulatory duo are charging ahead with their plans to eliminate any remaining guardrails keeping the crypto sector from being all that it can be.
First up was Commodity Futures Trading Commission (CFTC) chief Michael Selig, who gave a speech Monday at the FIA (Futures Industry Association) Global Cleared Markets Conference in Boca Raton, Florida. Selig claimed to be speaking as CFTC chairman and not for the CFTC as a whole, but since he’s currently the only member of the normally five-member commission, he is the CFTC.
Selig offered a vision of “a new golden age of American markets” that will require “future-proofing” the CFTC’s sweeping changes “so that future administrations cannot govern through enforcement and staff discretion.”
Selig praised Project Crypto, the CFTC’s ‘every regulation must go’ partnership with the Securities and Exchange Commission (SEC). This effort will include publication of “a clear crypto asset taxonomy so that market participants can understand whether their products fall within CFTC jurisdiction, SEC jurisdiction, both, or neither.” (Hint: in most cases, it’s neither.)
The CFTC is also mulling “new rules that could clarify when leveraged, margined, or financed retail commodity transactions in crypto may be offered off-exchange under an ‘actual delivery’ exception and establish purpose-fit standards for margined spot trading on exchanges.” Selig has also directed CFTC staff to “consider how to clarify their views on the classification of true crypto-perpetuals.”
Staff have also been told to “provide guidance concerning the application of the CFTC’s intermediary registration requirements to developers of non-custodial software systems, like digital wallets and decentralized finance applications.” Selig said it’s “an open question” if DeFi developers must seek CFTC registration, and the CFTC intends to “address this question head-on.”
Notably, the question of legal liability for DeFi devs is one of the issues preventing the CLARITY Act’s forward progress, and yet Selig appears to be offering to take this loathsome burden off the Senate’s back. (He also appears to be clashing with the Department of Justice, which is seeking to retry Tornado Cash co-founder Roman Storm for money laundering and sanctions evasion charges.)
Somehow, amidst all this regulatory upheaval, Selig somehow found time to update the CFTC’s logo. Selig said “there will be more of these types of housekeeping and branding announcements to come, so stay tuned.” Can’t wait.
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SEC and CFTC sitting in a tree… d-e-r-e-g-u-l-a-t-i-n-g
Also speaking at FIA’s Florida shindig was SEC Chair Paul Atkins, who didn’t mention crypto once but did tell attendees about the “regulatory harmonization” between the SEC and CFTC that was going to make everyone’s lives so much easier going forward.
Atkins laid out what he called the “straightforward” principle that “where one agency’s framework achieves comparable regulatory outcomes, then it should be capable of satisfying overlapping requirements of the other.” Atkins insisted the goal was “not to precipitate regulatory arbitrage, but to produce regulatory coherence.”
SEC staff are already holding joint meetings with their CFTC counterparts, and both agencies have launched ‘harmonization initiative’ web pages to streamline future discussions. Atkins promised that, when it comes to enforcement, “the regrettable era of duplicative enforcement actions and conflicting remedial obligations for the same conduct is over.”
The day after Atkins’ speech, the CFTC and SEC announced that they’d entered into a memorandum of understanding (MOU) regarding “harmonization in areas of common regulatory interest.” The two agencies promise to “clarify, coordinate, and harmonize” in all areas that they believe their interests overlap. Naturally, this includes “closely coordinating and cooperating to remove obstacles where appropriate.”
This emphasis on speaking with one voice was underscored last week when Bloomberg reported that the two agencies are discussing plans about the CFTC moving its operations into the same complex that the much larger SEC calls home. These discussions about shacking up reportedly began last year and, if approved, wouldn’t likely take place until next year at the earliest.
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Binance sues WSJ for ‘prioritizing clicks over journalistic integrity’
Binance.US, the U.S.-licensed offshoot of the market-leading Binance exchange, has been about as busy as your local Blockbuster since its parent company’s legal woes began a few years ago. But the company recently began teasing plans about its rebirth, and those plans took another step forward this week with the announcement of a new CEO.
Stephen Gregory officially took over as Binance.US CEO on Monday, according to a Wednesday announcement by the exchange. Gregory is the former U.S. CEO of the Currency.com digital asset platform and also served in compliance roles at rival exchanges Gemini (NASDAQ: GEMI) and CEX.io.
Gregory replaces Norman Reed, the former Binance.US chief legal officer who was named CEO following the departure of Brian Shroder in July 2023. Shroder left shortly after the SEC filed a legal complaint against Binance.US for a long list of alleged securities violations (the SEC dismissed this complaint last year). Reed will reportedly continue to serve as a Binance.US advisor for an unspecified period.
But Wednesday’s biggest Binance news was the exchange filing a legal complaint against the Wall Street Journal for “false and defamatory reporting.” The complaint focuses on a February 23 Journal report that Binance fired multiple members of a compliance team for reporting over $1 billion worth of digital assets passing through the exchange on their way to Iran-backed terror groups.
The same day the Journal’s article was published, the New York Times issued its own report on the brouhaha. Both articles followed a Fortune article that was the first to report Binance’s alleged dismissals of the investigation team members. It’s unclear why the Journal has been singled out by Binance for legal redress while those other publications appear to be getting a pass.
Binance execs denied the reports at the time, with CEO Richard Teng singling out the Journal for failing to “acknowledge any of our corrections on the allegations.” The Journal clearly wasn’t cowed, and followed up with a new report on Wednesday that said the U.S. DoJ was now “investigating Iran’s use of Binance to evade U.S. sanctions.”
While the DoJ didn’t comment on this latest article, the Journal said DoJ officials “have contacted people with knowledge of the Iranian transactions to seek interviews and gather evidence.” The Journal said it “couldn’t determine whether the Justice Department is investigating Binance itself for potential misconduct, or solely the customers on its platform.”
This latest article quoted an unidentified Binance spokesman who said the company “categorically did not directly transact with any sanctioned entities.” Instead, Binance claims it “uncovered a sophisticated, multi-jurisdictional pattern of financial activity” and that the Iranian connections were “only identified and sanctioned after Binance began investigating and taking action in lock step with law enforcement to shut down this network.”
The complaint accused the Journal of making “a business of maligning both the cryptocurrency industry generally and Binance specifically, regardless of facts and reality.” Binance’s announcement of its complaint against the Journal cites the harms the exchange claims to have suffered as a result, “such as leading to government officials launching baseless and unnecessary inquiries into the company.”
The original Binance-Iran reports prompted Sen. Richard Blumenthal (D-CT), ranking member of the Permanent Subcommittee on Investigations, to write a letter to Teng last month, “seeking information and records from Binance, including details on why the exchange chose to suspend, and in some cases, terminate compliance personnel who discovered illicit Iranian and Russian use of the platform.”
A couple of days after Blumenthal issued his letter, all 11 Democratic members of the Senate Banking Committee wrote their own letter to Attorney General Pam Bondi and Treasury Secretary Scott Bessent urging them to “conduct a prompt, comprehensive review of sanctions compliance” on Binance. The letter asked the two cabinet members to respond by this Friday (13).
Both of the letters cite Binance’s financial ties to crypto ventures linked with President Trump’s family. Blumenthal says Binance “sought to evade accountability and influence the White House through lobbying and a financial partnership with World Liberty Financial.”
The Banking Dems’ letter says, “Binance has made numerous business decisions that have helped President Trump and his family profit from their crypto ventures.” Both letters also reference the fact that Binance founder Changpeng ‘CZ’ Zhao, who spent four months in a U.S. prison for violating the Bank Secrecy Act, was pardoned by Trump last October.
In other Binance legal news, on March 6, the U.S. District Court for the Southern District of New York dismissed a civil complaint filed by 535 individuals impacted by 64 different Islamic terror group attacks.
The suit, filed in September 2024, accused Binance and CZ of having “aided and abetted these attacks by knowingly facilitating the transfer of millions of dollars’ worth of cryptocurrency to and from terrorist groups.”
Judge Jeannete Vargas dismissed the suit for (a) failing to establish that Binance “knowingly and substantially” assisted the terrorists, and (b) failing to establish personal jurisdiction on the part of CZ and Binance’s parent company. However, Vargas gave the plaintiffs leave to amend their complaint to provide additional details that might correct these deficiencies.
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Source: https://coingeek.com/white-house-accuses-banks-of-hijacking-crypto-market-structure-push/