On July 29, Patrick Witt, a White House crypto adviser, responded sharply to a letter from 134 banking executives calling for broader restrictions on stablecoin rewards.
The letter urged senators to expand limits beyond the current ban on paying interest on stablecoins, seeking to cover rewards, bonuses, and incentives tied to stablecoin holdings.
Witt highlighted the contradiction, pointing out the CLARITY Act already forbids interest payments on stablecoins but banks continue to claim the bill threatens community bank lending.
He mocked the banks’ stance with a tweet, emphasizing how the legislation’s Section 10404 explicitly bans interest payments but banks want even tighter controls, warning it could harm smaller banks.
The banking leaders, including figures from Bank of America, U.S. Bank, and several regional banks, argue stablecoins should remain payment tools, not savings instruments. They fear rewards linked to balances or holding periods might mimic interest, undermining traditional banking.
Meanwhile, the bill’s chances of passing have dropped to a record low 27% for 2026, after Senate delays and scheduling decisions narrowed the window before the August 8 recess.
Policymakers and traders watching this development now see a slim possibility that the CLARITY Act will move forward this year, complicating stablecoin regulation.
Coinbase’s stock steadiness amid these ongoing regulatory debates reflects wider market caution in the crypto sector.
This content is for informational purposes and does not constitute financial advice.
