Stablecoin Yield Drama Finally Cooling Off, Says Witt as Congress Ponders Actually Passing Something

The White House's main crypto adviser, Patrick Witt, said work is still being done to lock in the compromise that he thinks will move the Digital Asset Market Clarity Act forward in the U.S. Senate, though several other points are also being worked out behind the scenes. In an interview on CoinDesk TV Monday, the executive director of the President's Council of Advisors for Digital Assets suggested that the common ground key senators from both parties said they'd secured on stablecoin yield seems to be intact. "We're hopeful that the compromise that has been reached will be durable and will hold," Witt said. "Solving that was a must-have before we could get onto the other outstanding issues," which he said he's now pivoting to, though some have already been resolved. Basically, the yield drama that's been dragging on longer than a JPEG collection's floor price might finally be hitting a cooldown period.

Apart from stablecoin yield, over which bankers had convinced some in the Senate that their deposit base could be in peril, the Clarity Act had other potential hangups. These include illicit financial protections in the decentralized finance space and a request from Democrats that senior government officials, most pointedly President Donald Trump, be barred from profiting off the crypto sector. Because nothing says "regulatory clarity" quite like debating whether the commander-in-chief should be allowed to rug pull the entire industry from the Oval Office.

Though Witt wouldn't identify which topics have been settled, he said negotiations "made considerable progress in the background" while the yield argument between banks and crypto firms got most of the attention. "We're very close to closing them out," he said. "All of these issues felt intractable and unsolvable at one point in time. So the fact that we've been able to close out a lot of them gives me confidence that we can close out these other ones, too." For those keeping score at home, that's the political equivalent of saying "trust me bro, we're almost there" – but hey, sometimes that's all it takes in D.C.

The Clarity Act would need a markup hearing in the Senate Banking Committee before advancing toward a final Senate vote. It had been close to such a hearing at the beginning of the year, but bank lobbyists raised objections to stablecoin yield that delayed the process. Nothing says "innovation-friendly financial regulation" quite like letting the people who brought you the 2008 mortgage crisis determine how your stablecoins earn yield. Last week, White House economists issued a report downplaying threats the banking sector contended are posed by giving stablecoin holders a return resembling interest from a bank account. On Monday, the American Bankers Association responded, saying the White House argument was flawed. Witt said the view of bankers is wide-ranging, depending on how close they are to the technology. "They're grappling with it," he said. "These are all important issues to their members. And, you know, some of them are going to view stablecoins more positively. Some are going to be a little bit more threatened by them." Translation: the banking industry's stance on stablecoins is about as unified as a crypto Twitter argument about what counts as a securities violation – which is to say, completely fractured.