Trump’s crypto advisor confirms ‘agreement in principle’ on CLARITY Act
The long-stalled Digital Market Clarity Act, better known as the CLARITY Act, appears to be moving again in Washington after months of gridlock. The White House has acknowledged that it has reached a partisan agreement with key senators to push the crypto-focused bill forward, potentially reshaping the regulatory landscape for digital assets in the United States.
On 20 March, Patrick Witt, President Donald Trump’s chief advisor on digital assets, announced that negotiators from the Senate and the White House had come to an “agreement in principle” on the legislation. Witt described the breakthrough as a “major milestone” for the bill, which has been stuck in the Senate despite having passed the House last July.
Witt credited Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) with brokering the deal that unlocked the current impasse. According to him, the agreement doesn’t mean the work is over, but it does mark a turning point in the bill’s trajectory. He emphasized that several unresolved issues still need to be finalized, yet framed the development as the most significant progress toward passage since the bill hit the Senate.
With the political negotiation largely in place, attention is now shifting away from Congress and toward a powerful set of stakeholders: the traditional banking sector. As of the time of the announcement, major industry organizations such as the Bank Policy Institute (BPI) and the American Bankers Association (ABA) had not publicly weighed in on the new deal. Their reaction could be decisive in determining whether the compromise holds or collapses.
Why the CLARITY Act stalled in the first place
The CLARITY Act cleared the House in July but ran into serious headwinds once it arrived in the Senate. The main flashpoint was not the overall framework for digital assets, but a narrower, highly technical question: how to handle yield on stablecoins.
Since January 2026, the bill has been effectively frozen over concerns tied to the “stablecoin reward” provisions referenced in the related GENIUS Act. Banks argued that a perceived loophole would allow stablecoin issuers and platforms to offer interest-like rewards on digital dollar balances, potentially functioning like high-yield savings accounts outside the traditional banking system.
From the banking industry’s perspective, this created the risk of a large-scale “deposit flight,” where customers shift funds out of regulated banks and into stablecoins that pay competitive returns but sit outside conventional deposit insurance frameworks. As a result, major banking groups pushed back aggressively, signaling they would oppose the CLARITY Act unless the yield issue was resolved in a way that protected their core business model.
Over the past months, negotiators from the crypto sector and the banking industry have held three rounds of talks attempting to find a middle ground on stablecoin yields. Each previous attempt failed to fully address deposit-flight concerns while still allowing room for innovation in the digital asset space.
The new compromise on stablecoin yields
The latest agreement attempts to strike that balance. Under the compromise now on the table, stablecoin rewards on *passive* balances would be blocked. In practice, that means simply holding a payment stablecoin in a wallet or on a platform would not generate automatic yield, unlike an interest-bearing bank deposit.
This change is designed to reassure banks that stablecoins will not function as direct competitors to traditional savings accounts. Payment-focused stablecoins would remain primarily transactional tools, not default high-yield instruments for everyday savers.
However, the proposal does not ban rewards entirely. Instead, it distinguishes between passive holding and active usage. Activity-based rewards would still be permitted for specific use cases such as transfers, remittances, platform utility, and possibly other clearly defined services. That structure aims to preserve incentives for innovation in payments, cross-border transactions, and on-chain services, without creating a parallel shadow banking system.
Negotiators argue that this model preserves the core promise of digital assets-programmable, efficient, and borderless money-while narrowing the risk of destabilizing the traditional deposit base.
Mixed reactions from the crypto sector
While the compromise may ease fears in the banking world, it has not been universally welcomed within crypto. Some influential industry leaders have pushed for greater flexibility in defining what types of activities can earn yield on stablecoin balances.
Robinhood CEO Vlad Tenev, for example, has publicly argued that lawmakers and regulators should avoid locking in overly rigid rules about which activities can generate interest or rewards. In his view, the rapidly evolving nature of digital finance demands flexibility so that new business models and financial primitives can emerge without immediately falling afoul of regulation.
The tension here is clear: too much restriction may blunt the competitive advantages of crypto-native financial products, while too little restraint risks provoking a harsh reaction from regulators and the banking lobby. The current compromise attempts to thread that needle, but it remains uncertain whether either side will see it as an acceptable long-term arrangement.
What happens next in the Senate
If the banking industry signals that it can live with the new yield structure, the CLARITY Act will be poised for its next procedural step. The Senate Banking Committee is expected to hold another formal markup session to consider amendments and advance the bill out of committee.
This markup is likely to take place after the Easter recess, assuming no last-minute breakdown in talks with the financial sector. However, passing the committee stage is only one hurdle. The Senate leadership would still need to decide whether and when to bring the bill to the floor for a full vote-an inherently political decision, especially in an election year.
Even if the Senate approves the bill, it must then be reconciled with the version that passed the House. Differences between the two chambers’ texts would need to be ironed out before a final unified bill can be sent to the president for signature.
Kristin Smith of the Solana Policy Institute has highlighted a key deadline: the August recess. In her assessment, the CLARITY Act has until that break to make meaningful legislative progress. If it fails to advance by then, the looming U.S. elections could push the issue to the sidelines, potentially delaying comprehensive crypto market structure reform yet again.
Why the CLARITY Act matters for crypto markets
For market participants, the bill is more than a technical regulatory document-it represents a test of whether the United States can provide clear rules of the road for digital assets. The current patchwork of guidance, enforcement actions, and overlapping agency claims has created significant uncertainty for both established firms and startups.
A functioning, coherent market structure bill could clarify which agencies oversee which types of digital assets, define the status of certain tokens, and outline how stablecoin issuers must operate. This, in turn, may encourage more institutional participation, reduce the risk of abrupt enforcement surprises, and make it easier for companies to plan long-term product strategies.
The renewed momentum around the CLARITY Act has given a modest sense of relief to some in the industry who feared the bill was dead. Still, the final shape of the legislation-and whether it truly resolves key regulatory ambiguities-remains to be seen.
The political calculus behind the deal
The timing of the agreement in principle is not accidental. Crypto policy has quietly become a partisan flashpoint, with different political factions trying to appeal to both innovation-minded voters and a financial sector wary of disruption.
For Trump’s camp, championing a clearer framework for digital assets fits into a broader narrative of supporting technological innovation and reducing regulatory uncertainty. For some Democrats, especially those representing tech-forward or finance-heavy constituencies, participating in a bipartisan deal may be a way to show they are not reflexively anti-crypto while still prioritizing consumer protection and financial stability.
The involvement of Senators Tillis and Alsobrooks underscores the strategic nature of the compromise. Both lawmakers have incentives to present themselves as pragmatic negotiators who can deliver complex financial legislation, particularly in a policy area that sits at the intersection of banking, securities law, and technology.
Implications for banks and stablecoin issuers
If the yield compromise sticks, banks and stablecoin issuers will face a new competitive landscape. Banks may gain some comfort knowing that simple stablecoin holding will not automatically siphon away deposits by offering better returns. However, they may still find themselves under pressure to innovate on payments, real-time settlement, and cross-border services where stablecoins and other digital assets excel.
Stablecoin issuers, on the other hand, will likely need to fine-tune their business models. Without the ability to pay yield on passive balances, they may double down on transaction-based use cases, cross-border payments, merchant services, and integration with decentralized applications. Reward programs will have to be carefully designed to align with whatever final definitions of “activity-based” incentives emerge from the law and subsequent regulation.
In practice, this could push issuers to build more robust ecosystems around their tokens-where users gain rewards not for parking value, but for using stablecoins as a functional part of economic activity.
Potential impact on DeFi and tokenized finance
A central question looming over the CLARITY Act is how its stablecoin provisions will interact with decentralized finance (DeFi). Many DeFi protocols already offer yield-bearing products that rely on stablecoins as collateral or as core assets in liquidity pools. If U.S.-based platforms face strict rules on passive yield, they may have to revisit their product designs or shift more activity to non-U.S. entities and jurisdictions.
At the same time, clearer U.S. rules could legitimize certain forms of tokenized finance, encouraging traditional institutions to experiment with on-chain settlement, tokenized deposits, and regulated stablecoins. The line between “passive” and “activity-based” yield in a DeFi context may become a key area of regulatory interpretation-and a potential source of legal disputes.
Developers and protocols that want to remain accessible to U.S. users will likely monitor the final text and any implementing regulations closely, adjusting smart contract logic and economic mechanisms to avoid being classified as unauthorized yield on passive balances.
The risk of over-regulation vs. regulatory vacuum
The CLARITY Act sits at a delicate midpoint between two undesirable extremes. On one side is over-regulation: a regime so strict and inflexible that it discourages experimentation, drives talent and capital offshore, and locks in outdated assumptions about how digital financial systems should work. On the other is a regulatory vacuum in which companies are left guessing about enforcement priorities, and users are exposed to fraud, instability, and systemic risk.
The current compromise on stablecoin yield exemplifies this balance. Blocking interest on passive balances while permitting rewards tied to real activity may not satisfy hardliners on either side, but it attempts to create a structure that can evolve. The real test will come in implementation-how agencies interpret the law, how courts resolve disputes, and how quickly policymakers adapt to unforeseen consequences.
What crypto investors and builders should watch
In the near term, crypto investors and builders should keep track of several key signals:
– Whether major banking associations endorse, reject, or seek to further modify the yield compromise.
– The timing and content of the next Senate Banking Committee markup.
– Any amendments introduced at the committee or floor level that alter the treatment of stablecoins, token classifications, or market structure rules.
– Statements from large crypto firms, exchanges, and stablecoin issuers about how they plan to adapt to the proposed framework.
– Political rhetoric around crypto as the election cycle intensifies, which may influence how aggressively lawmakers push the bill.
If the CLARITY Act advances before the August recess, it could set the tone for U.S. crypto policy for years. If it stalls again, the industry may be in for another prolonged stretch of uncertainty, with regulation driven more by enforcement actions than by comprehensive legislation.
A cautious step toward regulatory definition
The confirmation of an “agreement in principle” does not guarantee success, but it breaks a long period of deadlock. For an industry often whipsawed by headlines and policy rumors, the movement around the CLARITY Act offers a rare moment of clarity-however partial and provisional.
Whether this step turns into a durable, balanced framework for digital assets will depend on how the banking sector responds, how Congress manages the compressed legislative calendar, and how future administrations choose to interpret and enforce the rules. For now, the message is clear: the fight over how to regulate stablecoins and the broader crypto market is far from over, but it is finally back on the legislative agenda.