Crypto market framework edges closer to completion as White House steps in
Negotiations over the long-debated US crypto market structure bill, known as the CLARITY Act, are entering what appears to be a decisive phase. After a third round of talks at the White House on Thursday, participants describe the process as finally gaining traction, even though the final text is not yet locked in.
Patrick Witt, executive director of the President’s Council of Advisers on Digital Assets, characterized the latest session as a turning point. In a post on X, he called the meeting “a big step forward” and said negotiators are “close” to a deal. Witt added that, assuming both sides keep engaging constructively, he expects the current deadline to be met.
Unlike earlier, larger gatherings, this most recent discussion was more tightly focused. According to people who attended, the meeting brought together a smaller group that included representatives from major crypto firms such as Coinbase and Ripple. Traditional finance, however, was present in a different form: no individual bank CEOs or executives took part directly. Instead, the banking sector’s interests were voiced by trade associations, including the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America.
A notable shift in tone also emerged. Previous sessions were largely driven by industry stakeholders, who helped shape the agenda and frame the key issues. This time, the White House assumed a far more directive role. Witt reportedly circulated draft legislative language that became the central document around which the conversation revolved, signaling that the administration is now actively steering the contours of the bill.
At the heart of the new draft is one of the most contentious questions in US crypto policy: whether and how companies can pay yield on stablecoins. The text was written in response to a set of objections raised by banks in a memo titled “Yield and Interest Prohibition Principles,” which was shared the week before. While the draft acknowledges the banking sector’s concerns, it also tries to narrow the scope of any prohibitions.
The clearest outcome so far is that interest or yield on passive, idle stablecoin balances – essentially the crypto equivalent of interest on checking or savings accounts – is being pushed firmly off the negotiating table. For many crypto firms, especially those building payment and savings products, the ability to offer yield on stablecoin holdings has been a central part of their business model. The discussion has now shifted toward whether limited, activity-based rewards might still be allowed, such as incentives for specific on-chain actions, staking-like mechanisms, or promotional programs, rather than blanket interest on account balances.
One participant from the digital asset industry suggested that banks’ opposition is less about systemic risk or classic “bank run” scenarios than previously claimed. Instead of an immediate fear of mass deposit flight, this person framed the pushback as an effort to curb a new and agile competitor before it can encroach on banks’ core business of gathering and monetizing deposits.
From the banking side, however, there is a strong push to embed a formal analytical safeguard into the legislation. A source aligned with the banking organizations said they are still insisting that the final bill include a deposit outflow study. This study would mandate a systematic review of how payment-oriented stablecoins – especially those that might eventually integrate with payroll, retail payments, or corporate treasuries – could erode traditional bank deposit bases over time. That kind of analysis could shape future regulatory calibrations, capital rules, or restrictions tied to the growth of stablecoin ecosystems.
Bank representatives are also encouraged by the emergence of a new anti-evasion clause in the draft text. This provision would empower multiple federal regulators – including the Securities and Exchange Commission (SEC), the Treasury Department, and the Commodity Futures Trading Commission (CFTC) – to police attempts to circumvent a ban on yield for idle balances. The language is designed to prevent firms from simply rebranding interest as “cashback,” “rewards,” or other marketing terms while functionally offering the same product.
The enforcement teeth behind this proposal are substantial. Civil penalties could reportedly run as high as 500,000 dollars per violation per day. That scale of potential liability signals that regulators intend to take any breach of the yield prohibition extremely seriously and want explicit authority to move quickly against violators. For crypto companies, this raises the stakes on compliance design, legal structuring, and product marketing if the bill passes in anything like its current form.
The next steps in the process will involve a broader temperature check within the financial sector. According to coverage by journalist Eleanor Terrett, bank trade associations are now preparing to brief their member institutions on the latest version of the draft. Those internal conversations will help determine how much room there is for compromise on limited stablecoin rewards – for example, whether narrowly tailored incentives might be acceptable if they do not resemble traditional interest-bearing accounts.
Talks are expected to continue intensively over the coming days. One person with direct knowledge of the negotiations said that hitting the end-of-month deadline still looks feasible. That assessment suggests that while significant disagreements remain – particularly around yield, enforcement, and long-term deposit dynamics – the political will to secure a deal is stronger than it has been at any earlier point in the CLARITY Act’s history.
Beyond the immediate yield debate, the emerging bill is also seen as a foundational attempt to define the overall market structure for digital assets in the US. Policymakers are wrestling with where stablecoins, tokenized assets, and other crypto products should sit within the existing regulatory perimeter, and which agencies should take primary responsibility for oversight. The involvement of the SEC, Treasury, and CFTC in the anti-evasion framework hints at a coordinated, multi-agency approach that could become a model for future digital asset policy.
For crypto businesses, the distinction between “idle balances” and “activity-based rewards” could prove decisive. If the final law permits rewards tied to specific, verifiable actions – such as facilitating payments, providing liquidity, or participating in certain on-chain governance processes – firms may still be able to build attractive user incentives without crossing the line into prohibited yield. That would, however, require careful legal engineering and clear disclosures so that programs cannot be interpreted as disguised interest.
Retail users and institutional investors are also watching closely. Many of the most popular stablecoin products to date gained traction by promising yield in a low-interest environment, framing themselves as a higher-return alternative to traditional savings accounts. A strict prohibition on interest for idle balances in the US could push some of those products offshore, encourage the rise of non-US stablecoins, or accelerate innovation in more complex DeFi structures that fall outside the act’s direct scope. At the same time, a clear, enforced framework might draw more conservative institutions into the market by reducing legal and regulatory uncertainty.
For banks, the outcome of the CLARITY Act negotiations could shape their strategic posture toward crypto for years. A bill that strongly limits yield-bearing stablecoin products might preserve banks’ deposit franchises in the short term but could also slow their own adoption of tokenized deposits or blockchain-based payment rails. Conversely, a more flexible regime could spur banks to build or partner on compliant stablecoin offerings rather than simply resisting them, blending traditional balance sheets with on-chain settlement technologies.
Regulators are trying to strike a balance between innovation and stability. On one hand, stablecoins and other digital assets promise faster, cheaper payments and programmable financial services. On the other, unchecked yield products have already contributed to spectacular failures and losses in the crypto sector. The emphasis on anti-evasion and significant penalties in the draft suggests that lawmakers want to prevent a repeat of the opaque, quasi-banking structures that collapsed during previous market downturns.
The CLARITY Act is also unfolding against a broader backdrop of international regulatory competition. Several jurisdictions are moving quickly to put in place comprehensive stablecoin and crypto frameworks, hoping to attract talent and capital while setting global norms. The decisions US lawmakers make on yield, market structure, and agency jurisdiction will influence where companies choose to build, which products are offered to American users, and how interoperable US markets will be with emerging global standards.
As negotiations enter their final stretch, market participants are preparing for multiple scenarios. Legal teams are modeling how different versions of the bill would affect custody, exchange operations, and wallet services. Product teams are sketching out alternative reward structures that might pass regulatory muster. Investors are evaluating which business models are most exposed to a hard line on yield and which might benefit from a clearer, more predictable rulebook.
One thing is already evident: however the CLARITY Act is ultimately finalized, it will mark a watershed moment in the relationship between Washington and the digital asset industry. The White House’s decision to take a more assertive role, introduce concrete legislative language, and convene both crypto leaders and banking trade groups signals that the era of purely ad hoc, enforcement-first crypto policy in the US may be giving way to a more structured, statute-based approach.
For now, all sides remain in intensive talks, working against a tight deadline and under heavy public and political scrutiny. The final contours of the bill – and particularly the fate of stablecoin yield – will help determine whether the next phase of US crypto development is shaped more by cautious constraint or by regulated, but still ambitious, innovation.