Banks Should Embrace Stable‑coin Yield, White House Adviser Says Amid CLARITY Act Negotiations
Washington, Feb. 13 — The White House’s lead crypto adviser, Patrick Witt, told Yahoo Finance that the growing dispute over stable‑coin reward programs should not be viewed as a threat to the traditional banking sector. Instead, he urged both banks and crypto firms to find common ground as Congress rushes to finalize the CLARITY Act.
The controversy
Stable‑coin “yield” – the practice of rewarding users for holding a dollar‑linked token on platforms that lend or otherwise generate returns – has become one of the most contentious points in the draft CLARITY (Clear Regulation of Asset‑Linked Tokens and Instruments) market‑structure bill. Crypto firms argue that these rewards are a legitimate product offering, while many banks fear they could erode deposits and the core banking business model.
Witt characterized the dispute as “unfortunate” and insisted that the yield‑generation mechanisms used by crypto platforms do not undermine the banking model. He noted that several large banks are already applying for federal charters through the Office of the Comptroller of the Currency (OCC) in order to roll out bank‑like services, including stable‑coin products, to their own customers.
“Providing stable‑coin services to clients is comparable to other crypto offerings and does not create an unfair competitive edge,” Witt said. “In the future, I don’t anticipate this being a barrier; firms will simply find ways to integrate these tools into broader product suites.”
What the CLARITY Act seeks to do
The legislation, still pending congressional approval, would:
- Define jurisdiction – Allocate clear regulatory authority over crypto activities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
- Create a taxonomy – Establish a classification system for digital assets, including stable‑coins, to standardize reporting and compliance.
- Set a framework for market structure – Provide guidance on exchanges, custodians, and other critical infrastructure.
Industry insiders and policymakers agree that the Act’s passage is time‑sensitive. Critics warn that the 2026 U.S. midterm elections could shift the political balance and jeopardize the momentum built by the current administration. Treasury Secretary Scott Bessent has warned that a Democratic takeover of the House could stall or derail the negotiations.
Witt echoed the urgency, stating that the White House Crypto Council aims to secure a signature before the election cycle “sucks the oxygen out of the room.” He added that the window for legislative compromise remains open but is narrowing quickly.
Analysis
Why banks should consider stable‑coin yield
- Customer demand – Retail and institutional investors are already seeking higher‑yield alternatives to traditional savings accounts. Offering stable‑coin yield could help banks retain and attract this clientele.
- Competitive parity – With a growing number of crypto platforms providing yield, banks that ignore the product risk ceding market share to fintech rivals.
- Regulatory clarity – If the CLARITY Act’s taxonomy includes stable‑coins as a distinct asset class, banks will have a clearer path to launch compliant products, reducing legal uncertainty.
Potential risks
- Regulatory overlap – Even with clearer jurisdiction, banks may need to navigate both SEC and CFTC rules, especially if stable‑coin products are tied to DeFi protocols.
- Reputational concerns – Some legacy banks remain cautious about associating with assets that have experienced volatility or fraud allegations, even when they are pegged to the U.S. dollar.
- Implementation costs – Building the necessary infrastructure to handle tokenized assets and yield distribution could require significant investment.
Political timeline
- The CLARITY Act is caught in a legislative calendar that may be truncated by the 2026 midterms. A potential shift in House control could either revive or stall the proposal, depending on which party holds the majority.
- The White House appears to be pushing for a swift resolution, positioning the Act as a “window of opportunity” before electoral politics dominate the agenda.
Key takeaways
- Stable‑coin yield is not viewed as a competitive threat by the White House adviser; rather, it is presented as an opportunity for banks to expand their product lines.
- Banks are already moving toward crypto‑friendly charters, signaling industry readiness to offer stable‑coin services.
- The CLARITY Act aims to clarify regulatory authority and create a unified asset taxonomy, which could reduce uncertainty for both banks and crypto firms.
- Legislative timing is critical; the 2026 midterm elections could either accelerate or halt progress on the bill.
- Stakeholders are urged to compromise on the yield issue to avoid further delays in the bill’s passage and to foster a more integrated U.S. crypto market.
The article follows Cointelegraph’s editorial standards of transparency and independence. Readers are encouraged to verify details independently.
Source: https://cointelegraph.com/news/white-house-banks-shouldnt-fear-stablecoin-yield?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
