The White House has issued a mandatory invitation to top executives from the banking and cryptocurrency sectors for a Monday summit, moving to break a legislative deadlock that threatens to derail the administration’s digital asset agenda. The emergency meeting, organized by the White House Crypto Council, follows a collapse in negotiations over the Digital Asset Market Clarity Act (CLARITY Act) after Coinbase abruptly withdrew its support last week.
Administration officials described the intervention as a "final effort" to broker a compromise before the Senate Banking Committee permanently shelves the bill. The dispute centers on a single, explosive issue: the right of stablecoin issuers to pay yield to customers.
The $6 Trillion Stalemate
Negotiations fractured when Senate drafters, bowing to pressure from the American Bankers Association (ABA), inserted a provision banning "passive" yields on stablecoins. Traditional lenders argue that allowing non-bank issuers to offer 3-5% APY on dollar-pegged assets would trigger a catastrophic flight of capital from the regulated banking system.
Bank of America CEO Brian Moynihan reportedly warned lawmakers that up to $6 trillion in deposits could shift to stablecoin issuers if the "yield loophole" remains open, undermining the fractional reserve model.
Crypto leaders counter that the ban is a transparent attempt to legislate competition out of existence. Circle CEO Jeremy Allaire dismissed the bank run narrative as "totally absurd," arguing that stablecoin reserves, often held in Treasuries, are safer than uninsured bank deposits.
Coinbase’s "Rug Pull"
The conflict escalated when Coinbase pulled its backing for the Senate draft, a move one White House source characterized to Reuters as a political "rug pull." The exchange contended that the revised text, specifically the yield ban in Section 189, would effectively neuter the U.S. crypto market while foreign jurisdictions move ahead.
Markets reacted nervously to the legislative uncertainty. Coinbase (COIN) slipped nearly 1% in Wednesday trading, while institutional crypto funds recorded $1.73 billion in weekly outflows, signaling that smart money is de-risking until the regulatory picture clears.
Institutional Context
The administration’s urgency stems from the partial success of the GENIUS Act, signed into law in July 2025, which established reserve requirements for stablecoins but left market structure undefined. Without the CLARITY Act to delineate jurisdiction between the SEC and CFTC, the industry remains in the legal gray zone that the Trump administration promised to eliminate.
Monday’s meeting will force a binary choice: either banks accept a capped yield model for stablecoins, or crypto firms agree to banking-style capital requirements. Until then, the CLARITY Act remains frozen.
