High-stakes Monday summit aims to salvage the stalled CLARITY Act as banks and crypto giants clash over yield.
The White House will convene top banking and cryptocurrency executives on Monday, February 2, in a last-ditch effort to save the Digital Asset Market Clarity (CLARITY) Act. The legislation, intended to be the definitive federal framework for digital assets, has effectively flatlined in the Senate Banking Committee following a withdrawal of support by Coinbase and key industry players in mid-January.
At the center of the deadlock is the “yield War.” Traditional lenders, represented by the American Bankers Association, have successfully lobbied for Section 404, a provision prohibiting digital asset service providers from paying interest on payment stablecoins. Their argument is existential: they claim yield-bearing stablecoins could siphon up to $6.6 trillion in deposits from community banks, effectively bypassing the insured banking system.
A bad law is worse than no law at all.
. Brian Armstrong, Coinbase CEO (Jan 14)
The Institutional Context
The Trump administration’s urgency is palpable. “Crypto Czar” David Sacks and Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, are expected to lead the mediation. Their goal is to reconcile the banking sector’s liquidity fears with the crypto industry’s revenue realities. For Coinbase ($COIN), which generated $355 million in stablecoin revenue in Q3 2025 alone, the yield ban is a non-starter.
Markets are reacting to the regulatory uncertainty. Bitcoin slid 5% to $77,295 on Sunday, while Ethereum dropped 9% to $2,312, erasing gains from the previous week. Traders fear that without a compromise on Monday, the CLARITY Act will be shelved until after the midterms, leaving the industry in enforcement purgatory.
The banking lobby argues that allowing stablecoin issuers, who are required to hold 1:1 reserves, to pass yield to customers creates an unfair advantage against banks burdened by lending risk and capital requirements. Crypto proponents counter that Section 404 preserves a banking monopoly on interest at the expense of consumer choice. Monday’s closed-door session will determine if a middle ground exists, or if the CLARITY Act is dead on arrival.
