White House Slams Banks for Opposing Stablecoin Yield Compromise in CLARITY Act

The White House has sharply criticized traditional banks for their opposition to a proposed stablecoin yield compromise in the CLARITY Act, escalating a growing divide between the administration and Wall Street over the future of the $320 billion stablecoin market.

On April 17, Patrick Witt, executive director of the White House Presidential Advisory Committee on Digital Assets, accused financial institutions of acting out of "greed or ignorance" due to their intensified lobbying to block yield-bearing stablecoins in the upcoming legislation.

"It’s hard to explain any further lobbying by banks on this issue as motivated by anything other than greed or ignorance. Move on."

Witt’s unusually sharp rhetoric underscores the administration’s frustration with banks’ resistance to a bipartisan compromise aimed at regulating the rapidly evolving stablecoin sector.

Bipartisan Compromise Faces Banking Industry Opposition

A bipartisan group of lawmakers, including Sens. Thom Tillis and Angela Alsobrooks, has proposed a compromise that would ban passive yield on stablecoin balances while permitting activity-based rewards. However, unnamed banking trade associations argue that even this restricted framework poses a structural threat to the traditional financial system.

According to reports, these associations have expanded their lobbying efforts to target multiple senators on the Senate Banking Committee.

Banking Industry’s Dire Projections vs. White House Data

Previously, the American Bankers Association claimed that the stablecoin yield loophole in the CLARITY Act could trigger up to $6.6 trillion in deposit outflows. However, these projections directly contradict findings from the White House.

A report by the Council of Economic Advisers concluded that a total ban on stablecoin yield would impose a net cost of $800 million on consumers. The report also argued that "the yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings."

Despite these assertions, banking representatives remain unconvinced, stating:

"As yield-paying payment stablecoins expand, households and businesses have stronger incentives to move funds out of bank deposits and into stablecoins, unless Congress prohibits yield. Even if total deposits in the banking system remain constant, deposits will be reallocated away from smaller banks toward a smaller set of large institutions, and the share of deposits tied up in stablecoin reserves will eat into overall bank lending capacity."

Market Demand for Yield-Bearing Stablecoins Accelerates

The legislative deadlock coincides with rapid growth in the stablecoin market, where holders are increasingly seeking yield-bearing assets. According to Messari data, the supply of yield-bearing stablecoins has grown 15 times faster than the broader stablecoin market over the past six months.

This surge in demand adds urgency for lawmakers to finalize the CLARITY Act before the end of April. Sen. Tillis told reporters his team is still refining the compromise text, while Sen. Alsobrooks indicated a release is likely next week. However, if the Senate Banking Committee fails to advance the bill by the deadline, political realities may further delay progress.