Why the CLARITY Act Compromise Is Infuriating Everyone-On Purpose

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CLARITY Act Update: Banks and Crypto Both Hate It—White House Calls It a Deal

Show AI Summary
Patrick Witt confirms stablecoin rewards issue is resolved through compromise.
Senate negotiators worked with White House to address bank-crypto clash over stablecoin yield.
Resulting language leaves both crypto firms and banks dissatisfied, indicating a balanced compromise.

The White House thinks a major disagreement that was blocking the CLARITY Act has been resolved. Patrick Witt, a key advisor on crypto policy, stated that the debate over rewards and interest rates for stablecoins is now finished.

At the Consensus conference, Witt announced that Senate negotiators have resolved a key disagreement that had stalled the bill aiming to regulate digital assets. The debate focused on whether companies dealing with stablecoins should be permitted to offer rewards or incentives to attract customers.

Witt explained that they resolved the problem with rewards and yields on stablecoins, which had led to a decrease in prices back in January.

A major sticking point in talks about the CLARITY Act has been how to handle rewards offered on stablecoins. Banks worried these rewards might encourage people to move money out of traditional savings accounts. Crypto companies countered that these rewards shouldn’t be regulated like bank interest. Senators Thom Tillis and Angela Alsobrooks had previously come to a tentative agreement with the White House to resolve this disagreement between banks and the crypto industry.

Banks and Crypto are both unhappy

Following the difficulties in January, the White House met with representatives from banks, cryptocurrency companies, and Senate negotiators. Witt explained that the resulting draft language was then given to Senators Tillis and Alsobrooks, who further refined it with input from those same groups.

The final result, Witt said, is a compromise that leaves both sides dissatisfied.

Witt explained that both the cryptocurrency industry and traditional banks are similarly dissatisfied, which suggests they’ve reached a reasonable agreement. He believes this balanced unhappiness indicates a successful compromise.

That specific sentence is the most important takeaway from the article. It really highlights how the White House is presenting the situation, even more effectively than focusing on the deadline.

Banks continue to express concerns about how stablecoins are treated, claiming the current rules don’t adequately prevent rewards offered by these digital currencies from drawing customers away from traditional bank savings accounts.

White House says GENIUS Act rules will not be disturbed

Witt explained that the CLARITY Act was carefully written to avoid conflicting with the GENIUS Act, a law governing stablecoin issuers that is already being put into practice by federal regulators.

Throughout the negotiations and compromises, a key principle for us was to avoid any interference with the ongoing GENIUS rulemaking process, as I understood it from Witt. We were very careful not to disrupt that process in any way.

According to his statement, the White House isn’t revisiting the issue of whether companies that issue stablecoins can distribute rewards or interest. He clarified that this particular question was already resolved through the GENIUS Act.

Witt described the CLARITY Act’s wording as a guide for businesses that handle stablecoins, rather than a complete overhaul of the rules for companies that issue them.

Ethics fight still not fully closed

Witt stated that most details have been worked out, but discussions about ethical considerations and potential conflicts of interest are still ongoing and politically sensitive.

Democrats want to add stricter ethics rules to the bill, and some people are worried about connections between political figures, their families, and the cryptocurrency industry. While the White House is open to reasonable regulations, they won’t agree to rules that specifically target any individual politician or family.

Witt explained that any agreement would need to be something everyone could support, from the President to the newest staff member working on Capitol Hill.

Even though the White House believes the main disagreements over the bill have been settled, the ethics section remains a sticking point for lawmakers.

Bitcoin Reserve update coming soon

Witt also provided information about the U.S. government’s Bitcoin holdings and other digital assets, and indicated they may share more updates on this in the coming weeks.

The official wouldn’t say how much Bitcoin or other cryptocurrency the U.S. government currently owns, explaining that their main focus right now is making sure those assets are secure and accurately tracked.

“Number one is getting it properly set up and properly secured,” Witt said.

He explained that cryptocurrency seized by authorities doesn’t immediately become available for use. It first needs to go through the legal system, and some of it might be given back to its original owners or used to compensate victims before it can be officially declared forfeited.

Why it matters

The CLARITY Act is shifting from a wide-ranging discussion about how markets should be structured to a more focused political negotiation. Now, the key question is what compromises banks, cryptocurrency companies, Democrats, Republicans, and the White House are willing to accept to get the bill passed.

Based on Witt’s statements, it appears the government now considers the disagreement over stablecoin yields to be resolved, though both parties may not be completely happy with the outcome. This is important because the dispute had been a major roadblock in progressing the legislation.

The main point for the crypto industry isn’t *when* things will happen, but *how* the White House is handling the situation. They seem focused on finalizing a deal on crypto yields, safeguarding the progress of the GENIUS Act, and shifting the remaining debate from policy discussions to political maneuvering.

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2026-05-07 00:05