White House crypto adviser Patrick Witt has criticized banking leaders seeking tighter stablecoin reward restrictions as Senate delays push the CLARITY Act's passage odds to a record low. Witt responded to a letter sent by 134 banking executives and industry leaders to Senate lawmakers, which sought changes to Section 10404 of the CLARITY Act. The section restricts issuers from paying interest or yield on payment stablecoins, and banking groups want lawmakers to extend the restriction to rewards, bonuses, and other incentives.
The banking leaders, including those from Bank of America and Goldman Sachs, claim that payment stablecoins should function as transaction tools rather than long-term savings products. They warn that rewards linked to a user's balance or holding period could encourage customers to move money out of insured bank accounts, potentially draining hundreds of billions of dollars from the traditional banking system.
CLARITY Act Implications
The debate has direct implications for US stablecoin users, as broader restrictions could limit the rewards that exchanges and other service providers offer. The CLARITY Act faces a shrinking Senate calendar, with Polymarket traders reducing the probability of the legislation becoming law in 2026 to 27%, its lowest recorded level.
Legislative Developments
Senate Republicans recently released an updated 616-page draft combining texts from the Senate Banking and Agriculture committees. The framework would place digital commodity spot markets under the Commodity Futures Trading Commission, while allowing the Securities and Exchange Commission to oversee investment contract assets. Crypto industry participants have urged Senate Majority Leader John Thune to begin the cloture process before lawmakers leave Washington, even if a final vote cannot occur.
