CLARITY Act Update: Crypto Group Fires Back at Banks With New Principles

The Digital Chamber, the largest blockchain trade association in the U.S. with 250+ members, released its own stablecoin reward principles on Friday. The document directly challenges banks’ demand for a total ban on stablecoin yield under the CLARITY Act.

This follows two White House meetings between crypto firms and banking leaders that ended without a deal.

At the Feb 10 session, banks arrived with a one-page paper titled “Yield and Interest Prohibition Principles” calling for a blanket prohibition on any stablecoin rewards.

What the Digital Chamber Is Willing to Give Up

The Digital Chamber is ready to drop interest-like payments on idle stablecoin holdings, the type of reward that most closely resembles a traditional bank savings account. But the group draws a hard line on two Section 404 exemptions it wants protected: rewards tied to DeFi liquidity provision and rewards for ecosystem participation.

Without those exemptions, the Chamber warned, the legislation “could significantly impair U.S. dollar-denominated stablecoins currently deployed in DeFi protocols,” and risk foreign currencies replacing the dollar across key parts of the digital asset ecosystem.

The group also accepts the banks’ request for a two-year study on how stablecoins affect bank deposits, but only if the study doesn’t trigger automatic regulatory rulemaking.

Banks Won’t Budge. Crypto Says Status Quo Works.

Digital Chamber CEO Cody Carbone framed the concession as significant. He pointed out that the GENIUS Act, already signed into law, permits stablecoin rewards. If banks refuse to negotiate, those rules stay in place.

“If they do nothing and they continue to say, ‘We just want a blanket prohibition,’ this goes nowhere,” Carbone said.

He added that crypto firms should still be able to offer rewards to customers who participate in transactions and other activities. Giving up idle yield, he said, is already a major concession under the CLARITY Act.

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White House Warns the Clock Is Running Out

Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, said in a Yahoo Finance interview that the window for passing the CLARITY Act is “rapidly closing” as midterm politics start pulling attention away.

“Let’s use a scalpel here to address this narrow issue of idle yield,” Witt said. “But let’s not take a chainsaw to this, let’s not let this derail the bill.”

What’s at Stake?

Witt stressed that the stablecoin yield fight is holding up a bill packed with provisions both sides want, from clear SEC-CFTC jurisdictional lines to developer protections and permissible crypto activities for banks.

He also noted that banks are already applying for OCC charters to offer their own crypto products, meaning the competitive gap they fear is closing on its own.

The White House has pushed for compromise language by the end of February. If the Banking Committee can’t break through, the most significant crypto market structure bill in U.S. history could stall past the midterms, potentially delaying comprehensive regulation by years.

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