REGULATION | Here is Why Banks are Still Fighting the CLARITY ACT Stablecoin Yield

The White House has sharply criticized U.S. banks for continuing to lobby against yield-bearing stablecoins in ongoing negotiations over the Digital Asset Market Clarity Act, escalating tensions between policymakers and the traditional financial sector.

Patrick Witt, executive director of the White House’s Presidential Advisory Committee on Digital Assets, in April 2026 accused banks of acting out of ‘greed or ignorance’ as they push to block provisions that would allow some form of returns on stablecoin holdings. He urged lenders to ‘move on’ from their opposition, signaling growing frustration within the administration.

The dispute centers on whether stablecoin issuers and related platforms should be allowed to offer users yield-like rewards. A bipartisan compromise under discussion would prohibit passive interest payments but permit activity-based incentives tied to usage.

Banking groups argue that allowing such yields could pull deposits out of the traditional banking system, potentially weakening lending capacity. Some industry estimates warn of trillions of dollars in possible outflows.

Yield bearing stablecoins are here to stay, whether the banks like it or not. Over the last 6 months, the growth in yield bearing stablecoin supply has begun to uncouple from the growth in the broader stablecoin market, and the gap continues to widen.

• The yield bearing stablecoin supply has outpaced the broader market by over 15x, with the growth starting around mid October 2025.

• The winners don’t do payments. Unlike issuers who offer both a payment stablecoin and a staked yield bearing one, the largest yield bearing stablecoin issuers focus offer only one asset, acting more like money market funds or bank deposits.

However, the White House has pushed back on those claims, citing a recent Council of Economic Advisers report which found that banning stablecoin yields would increase bank lending by only about $2.1 billion, or roughly 0.02%, while imposing an estimated $800 million cost on net welfare cost to consumers.

The clash highlights a broader divide in Washington over how to regulate the rapidly growing stablecoin market, now valued at more than $300 billion, and its potential impact on the financial system.

With lawmakers facing a narrowing legislative window ahead of the 2026 midterm elections, the outcome of the yield debate is seen as a key hurdle for the CLARITY Act, a bill aimed at establishing a comprehensive regulatory framework for digital assets in the United States.

Stay tuned to BitKE for deeper insights into the global regulatory stablecoin space.

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