- Clarity Act aims to set clear crypto rules, but narrow Senate support and political risks slow progress.
- Coinbase CEO rejects bill changes that would cut stablecoin rewards, sparking tension with big banks.
- Industry divided: some back the Act, others warn future versions could be worse for crypto growth.
The White House is stepping in to resolve growing tension between banks and crypto platforms. On Monday, crypto czar David Sacks will convene major banking and crypto trade groups, including Coinbase, to discuss potential rounds of policy negotiations.
The discussions focus on whether crypto platforms can pay customers “yield,” or interest, on stablecoin balances. Cody Carbone, CEO of The Digital Chamber, emphasized, “This is about creating a foundational regulatory framework for crypto in the United States.” He added, however, that “attention on stablecoin rewards have now taken over this entire bill.”
The legislation, named the Clarity Act, aims to define which federal agencies regulate various crypto markets. This includes traditional crypto assets, decentralized finance products, and tokens tied to real-world assets such as stocks or bonds. Establishing these rules could give the crypto industry permanent legitimacy and allow banks to expand their crypto involvement.
Recently, the Senate Agriculture Committee passed a portion of the bill by a narrow 12–11 vote. TD Cowen analyst Jaret Seiberg noted that without ten Democrat votes, the bill “is not a sustainable strategy.”
Industry Pushback and Legislative Delays
After meetings with top bank CEOs in December, the Senate Banking Committee postponed its markup hearing on the bill to January. Since then, the hearing has been delayed twice.
Coinbase CEO Brian Armstrong publicly rejected the bill’s latest draft, claiming amendments “would kill rewards on stablecoins” and raised other concerns. At the World Economic Forum in Davos, Armstrong discussed the bill’s market structure goals and met with major banking leaders.
Bank of America CEO Brian Moynihan suggested Armstrong consider registering as an SEC-regulated money market fund. In contrast, JPMorgan CEO Jamie Dimon criticized Armstrong directly, saying, “You are full of s—,” accusing him of misleading public arguments.
Besides industry friction, the Clarity Act faces political risks. With midterms approaching, Congress’s attention may shift, jeopardizing the bill’s passage. Crypto political action group Fairshake has raised $193 million for elections, including $25 million from Coinbase. Yet, opinions diverge within the industry.
Andreessen Horowitz and Ripple CEO Brad Garlinghouse have expressed a more cautious stance. Patrick Witt from the White House stated, “You might not love every part of the Clarity Act, but I can guarantee you’ll hate a future Dem version even more.”
