As expectations grow around the possible approval of the CLARITY Act, the White House this week held its third round of negotiations, during which a so-called “compromise” began to take shape.
At the ETHDenver event, Patrick Witt of the White House Crypto Council said the gap between the two sides had narrowed “significantly” after a lengthy private meeting last week.
On one side were major crypto players, including Coinbase, Ripple, and Andreessen Horowitz, who argued for preserving the unique features of stablecoins, such as programmability and rewards.
The other camp included major banking groups, such as the American Bankers Association and the Bank Policy Institute, which focused on saving the traditional banking system.
What is the main point of disagreement?
That being said, the main disagreement comes from fear of the unknown. Banks fear that if crypto companies are allowed to offer high rewards on stablecoins, people might withdraw their money from banks. This could weaken banks and harm the economy.
However, crypto proponents see things differently. They think banks are trying to block competition. They say the yield ban gives banks unfair control over people’s savings and slows innovation.
Now that the White House is taking direct control of the bill, the crypto industry knows regulation is coming.
Source: Kenny Nguyen/X
The White House has set a March 1 deadline, warning that if negotiators fail to finalize the bill by then, it could stall or collapse.
The latest draft includes strict rules to avoid loopholes. If companies attempt to disguise their interests as “rewards,” they face sanctions from the SEC, Treasury, and CFTC, with fines of up to $500,000 per day.
This shows that the administration is focused on tight control and not soft compromise, keeping stablecoins close to the traditional banking system.
Obstacles remain
However, the bill’s future still depends on Sen. Tim Scott, who has yet to reschedule a key meeting. If the negotiations are successful, this long delay could finally end. Otherwise, the CLARITY Act could remain stuck in political impasse.
Making the same point, Witt said:
“I believe if we solve this problem, it’s going to start a domino effect here, and I think things could move pretty quickly once the problem is solved.”
Weighing in on this sentiment, Dan Gambardello added:
“It seems like they are just playing games…”
Source: Dan Gambardello/X
Even though Patrick Witt says negotiations are improving and both sides are working honestly, many in the market believe the deal could still fall through.
CLARITY Act Chances Diminish
In just one day, Polymarket’s chances of passing the CLARITY Act dropped sharply, from 72% to 42%. This shows that traders and investors are losing confidence.
Santiment’s data also suggests that people are starting to expect the bill to stall or collapse.
Source: Santiment/X
But some remain optimistic,
Source: Satoshi Flipper/X
Additionally, many crypto industry executives remain hopeful about the CLARITY Act.
On February 20, Ripple CEO Brad Garlinghouse also said he believed the bill could pass as soon as April.
For now, the crypto community and investors wait nervously. They want to see if Washington can finally implement the clear rules it has been promising for years.
Final Summary
- The CLARITY Act is entering its most critical phase, with the March 1 deadline leaving little room for further delays.
- Discussions between crypto companies and banks have narrowed differences, but key disagreements over stablecoin rewards remain unresolved.
