Patrick Witt has criticized U.S. banks after 134 banking executives and leaders urged the Senate to revise the CLARITY Act’s stablecoin provisions. The dispute centers on Section 10404, which restricts interest or yield on payment stablecoins. The banking industry requested that Senate leaders tighten the language pertaining to incentives, prizes, and awards for stablecoins. According to the letter, companies might design rewards in a way that has the same economic impact as interest.
The signatories included executives from Bank of America, U.S. Bank, Zions Bank, First Hawaiian Bank, Bank of Hawaii, Hancock Whitney Bank, FNBO, Eastern Bank, Lake City Bank, and Univest Financial Corporation.
According to the group, payment stablecoins should continue to be instruments for transactions rather than long-term holdings. They contended that incentives determined by holding length or balance size would divert money from bank deposits.
Deposit withdrawals might reduce local credit funding by hundreds of billions of dollars, bank executives warned. Deposits are an important source of credit for consumers, small companies, farmers, and local employers, they noted.
In response, White House cryptocurrency advisor Witt cited what he called a discrepancy in the banking industry’s stance. “Banks: To protect community bank lending, we must prohibit the payment of interest on stablecoins,” he wrote.
“Clarity Act: Bans payment of interest on stablecoins,” Witt continued. “Banks: The Clarity Act must be stopped, or it will destroy community bank lending!!!” he wrote after that.
The remarks were made at a time when several financial organizations opposed portions of the broader crypto market structure law while endorsing a stablecoin interest prohibition. Stronger wording to halt indirect yield arrangements is what their most recent request calls for.
A revised 616-page draft of the CLARITY Act was been issued by Senate Republicans. The measure creates a single foundation for the establishment of the digital asset market by combining texts from the Senate Banking and Agriculture Committees.
The proposal grants the CFTC control over digital commodity spot markets. Under the proposed system, investment contract assets would be managed by the SEC.
Additionally, the measure aims to safeguard decentralized networks that do not possess client assets, software developers, and blockchain developers. White House-backed ethics guidelines on the issuance of digital assets by government officials and their spouses are included in the revised draft.
Banks: We must ban the payment of interest on stablecoins to protect community bank lending!
Clarity Act: Bans payment of interest on stablecoins.
Banks: The Clarity Act must be stopped, or it will destroy community bank lending!!!
Make it make sense… 🫠 https://t.co/g3Icx3NGmu
— Patrick Witt (@patrickjwitt) July 29, 2026
Stay informed with the latest trends in Web3, blockchain innovation, and cybersecurity updates at 3verseTV
You need to login in order to Like
Leave a comment