White House crypto adviser says stablecoins will benefit banks
As the impasse between the banking and crypto industries continues to derail passage of the US digital asset market infrastructure bill known as the CLARITY Act, the White House's crypto adviser attempted to make the case for why stablecoins would actually lead to a boom for banks.
The main sticking point between bank lobbyists and the crypto industry over the CLARITY Act bill is centered around stablecoin rewards, which banks have been pushing lawmakers to ban, calling them a "loophole" that crypto companies are exploiting in the GENIUS Act's stablecoin law that bans issuers from offering interest on the assets
The GENIUS Act does not explicitly ban rewards, but the Senate Banking Committee's latest draft did eliminate them, which led Coinbase (COIN) to withdraw its support for the crypto market infrastructure bill. Senate Banking Committee Chair Tim Scott in turn delayed voting on the bill in order to try and resolve this dispute.
Patrick Witt, President Trump's crypto adviser, has held several meetings with representatives from the banking and crypto sectors to try and resolve the dispute, but despite claims of "progress" being made, there has been no indication that the two sides are close to reaching a truce.
And so Witt took to social media this week to make the case for why stablecoins will actually benefit the banking industry.
"Lost in the rewards/yield debate is how GENIUS-compliant stablecoins will actually lead to deposit inflows," Witt said in a post on X.
The GENIUS Act, which was signed into law last June, has widely been seen as a landmark piece of legislation for the crypto industry that not only legitimized its mainstream acceptance, but also gave it the first big step toward the regulatory clarity in the US it has been seeking.
“Stablecoins now present what I believe is the first credible opportunity to onboard a billion people into crypto,” said Daren Matsuoka, a data scientist at a16z’s crypto arm, said after the legislation was passed.
But in his post on X, Witt seems to be pointing to what the stablecoin bill means for the banks instead.
"Global demand for USD is massive," Witt said. "Foreigners exchange local currency for stablecoins from a US-based issuer. That is net new capital entering the American banking system."
Bank lobbyists release survey to make their case
Meanwhile, the American Bankers Association, which is a lobbying group for the banking industry, released a survey earlier this week that it had commissioned showing consumers, by a 3-to-1 margin, think Congress should ban stablecoin issuers from offering interest or rewards "if there is any risk it could reduce the amount of funds available to banks to lend in the community and support economic growth."
Bank lobbyists have cited a recent report from the Treasury Department showing that stablecoin rewards could drain as much as $6.6 trillion in deposits from the U.S. banking system.
But President Trump recently blamed the banks for essentially trying to resolve the main disagreement they have with the GENIUS Act through legislation in the CLARITY Act.
“The Genius Act is being threatened and undermined by the Banks, and that is unacceptable — We are not going to allow it,” Trump said in a post on Truth Social. “The U.S. needs to get Market Structure done, ASAP. Americans should earn more money on their money.”
According to Politico, Coinbase CEO Brian Armstrong had met with Trump at the White House before the president took to Truth Social and criticized the banks.