Banking Sector Has No Reason to Fear Stablecoin Returns, White House Crypto Advisor States
The provision of stablecoin rewards by crypto platforms and companies has emerged as a central dispute within the CLARITY crypto market structure legislation.
According to White House crypto adviser Patrick Witt, traditional banking institutions have no legitimate reason to feel threatened by cryptocurrency companies that provide stablecoin yield opportunities to their clients, and he believes both sectors need to reach a compromise regarding this matter.
Speaking about the controversy, Witt expressed that it is "unfortunate" how stablecoin yield has evolved into such a significant source of conflict between traditional banking institutions and the cryptocurrency sector, emphasizing that when crypto service providers distribute yield to their customer base, it poses no real threat to the fundamental business operations or market dominance of the banking industry. In his statement to Yahoo Finance, he explained:
They can also offer stablecoin products to their customers, just the same as crypto. This is not an unfair advantage in either way, and many banks are now applying for OCC bank charters themselves to start offering bank-like products to their customers.
Looking ahead, Witt expressed optimism by stating, "In the future, I don't think this is going to be an issue," before elaborating further that traditional financial institutions "are going to find opportunities to use these products and leverage them and offer new products to their customers and expand their businesses."
The question of whether crypto service providers and digital platforms should be permitted to distribute rewards to users holding stablecoins has become one of the most contentious issues facing the industry, playing a significant role in the postponements affecting the passage of the CLARITY market structure bill.
Witt and other officials caution that time for passing the CLARITY Act is dwindling
The CLARITY Act proposal aims to establish transparent regulatory authority over cryptocurrency markets by delineating responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), while simultaneously developing a classification system for different cryptocurrency assets.
Nevertheless, both government representatives and business leaders in the industry have issued warnings that the approaching 2026 US midterm elections have the potential to disrupt legislative efforts to enact the bill and could undermine cryptocurrency regulatory frameworks put in place by US President Donald Trump's administration.
US Treasury Secretary Scott Bessent expressed his concerns on Friday, stating, "I think if the Democrats were to take the House, which is far from my best case, then the prospects of getting a deal done will just fall apart."
Witt emphasized the urgency of the situation by noting, "There's a window here. The window is still open, but it is rapidly closing," while explaining that the White House Crypto Council has set a goal to secure the CLARITY Act's passage into law before the midterm elections "take all of the oxygen out of the room."