Banks are very concerned about stablecoin alternatives that offer users rewards above 5%. For them, allowing unhindered access to stablecoins will force depositors to flee local banks.
In fact, the perceived deposit drain has prompted banks to take a tough stance against the proposed crypto market structure bill – the CLARITY Act. Efforts to reach an agreement between banks and the crypto industry on the stable yield of coins have been in vain.
Today, banks are publicly opposing the White House’s call for compromise on the same issue to advance the CLARITY Act. The latest to oppose the White House is Christopher Williston, president of the Independent Bankers Association of Texas.
He warned,
“The compromise on CLARITY undermines local lending and economic production. There is simply no turning around in the fight for the cash that fuels the economies of the places we live. That’s not hard to understand, my friends.”
White House warns banks against ‘no compromise’ stance
However, Trump’s crypto advisor Patrick Witt disagrees with Williston’s argument. According to Wittbanks stand to lose more if they maintain a strong and tough stance.
“No compromise on CLARITY means no restrictions on intermediaries offering stable rewards. If you believe the banks’ argument about deposit flight, that would be catastrophic. It feels like an arsonist threatening to burn his own house down.”
Source: X/Patrick Witt
Here, it is worth noting that the US stablecoin law, the GENIUS Act, which was passed last year, allows issuers to pay rewards through intermediaries such as crypto exchanges and DeFi protocols.
So even if banks withdraw support for the CLARITY Act, stablecoin rewards will continue through intermediaries.
The CLARITY Act’s impasse became evident this week as President Donald Trump and his son Eric Trump criticized big banks for undermining the White House crypto agenda.
Surprisingly, the market is still pricing in a 71% upside chance of the crypto bill passed this year.
That said, the White House’s main push for stablecoins is their ability to service the U.S. Treasury’s debt more cheaply. In fact, recently research showed that stablecoins have become a marginal buyer of US Treasuries ($153 billion as of December 2025).
Source: BIS
Furthermore, the report adds that stablecoins sometimes depress Treasury yields by more than 3.5 basis points (bps). However, stifling stable rewards could slow the industry’s growth and the White House’s long-term strategic goal.
Final summary
- Trump’s crypto advisor has warned banks they will face “catastrophic” losses if they don’t compromise on the CLARITY Act.
- Stablecoins purchased $153 billion worth of US Treasuries, making them the third largest buyer in 2025.
