White House reveals US banks ‘refused’ to attend meetings to resolve stablecoin rewards issue in CLARITY Act

A senior White House official has accused major banking trade leaders of refusing to join earlier talks on stablecoin rewards, escalating a dispute that has become one of the final pressure points ahead of the Senate Banking Committee taking up the CLARITY Act this week. In a May 11 post on the social media platform X, Patrick Witt, executive director of the White House Presidential Advisory Committee on Digital Assets, said he had asked American Bankers Association President Rob Nichols and other bank trade CEOs to attend the February meetings aimed at resolving the question of stablecoin rewards and yield . He stated : “I specifically requested the attendance of Mr. Nichols and other bank trade CEOs at the meetings we hosted back in February to resolve the stablecoin rewards/yield issue. They refused. I guess the White House was beneath them?” The criticism injected the White House more directly into a fight that has divided banks, crypto companies, and lawmakers ahead of a scheduled May 14 markup of the CLARITY Act . The bill is designed to create a broader market structure framework for digital assets, but the treatment of stablecoin rewards has become a flashpoint over competition for deposits, consumer yield, and the future shape of dollar-based payments. Witt’s comments also reframed the timing of the banking industry’s objections. Rather than a new technical concern emerging before a committee vote, the White House official cast the dispute as an unresolved issue that banking leaders had an opportunity to address months earlier. Banks reopen stablecoin rewards fight before markup Over the weekend, the American Bankers Association (ABA) urged bank executives and employees to press senators for tighter restrictions in the CLARITY Act before the committee vote, warning that the current bill could still allow crypto firms to offer reward structures that resemble interest on deposit-like products. Nichols told bankers that lawmakers needed to hear from the industry before the legislation advanced. The ABA’s concern is that stablecoin issuers, exchanges, or related companies could attract customer funds by offering returns on assets that compete directly with traditional bank deposits. That argument has become central to the US bank lobby’s campaign . Banks rely on deposits as a funding base for loans to households, small businesses, farms, and corporations. If customers move cash into stablecoins that offer rewards, banks argue that lenders could face higher funding costs, tighter margins, and less capacity to extend credit. The banking industry has described the current compromise language as leaving a loophole. In its view, a ban on stablecoin issuers paying yield would be insufficient if affiliated exchanges, brokers, or other crypto platforms could deliver similar economic benefits through rewards, rebates, or incentive programs. That position has put banks at odds with crypto companies that see the rewards language as a basic competition issue. Stablecoin reserves are typically held in cash, short-term Treasuries, or other liquid instruments that generate income. The policy fight centers on whether consumers should be able to receive part of that return, and which type of institution should be allowed to offer it. The recent Senate compromise has attempted to separate passive yield from activity-based rewards. That distinction was meant to prevent stablecoins from becoming direct substitutes for interest-bearing deposits while preserving room for crypto platforms to reward users for participation, payments, or other services. White House analysis undercuts the lending warning The banking industry’s warnings have met resistance from the White House’s own economic analysis . The Council of Economic Advisers said in an April report that banning stablecoin yield would provide only a marginal lift to bank lending under its baseline assumptions. The CEA estimated that such a ban would increase bank lending by about $2.1 billion, equal to roughly 0.02% of total lending in the base case. That finding gives the administration a counterweight to the banking sector’s claim that stablecoin rewards could meaningfully damage credit creation. The report argued that most stablecoin reserves would not be permanently removed from the banking system. Instead, reserves held in cash, bank deposits, or Treasury instruments would continue to circulate through financial markets in different forms. The CEA also said a more severe impact would require a much larger stablecoin market and more restrictive assumptions about how reserves are held. In the administration’s framing, stablecoin rewards may affect bank margins, but the baseline effect on lending capacity appears limited. Moreover, a separate analysis by Galaxy Research furthered the argument by focusing on the international flow of dollars. Galaxy said banks were overstating the risk that stablecoin growth would simply drain domestic deposits. Its model projected tha