The traditional banking sector does not necessarily face a threat from cryptocurrency firms distributing stablecoin yield to users, and a balanced approach from both industries may be required, according to White House crypto adviser Patrick Witt.

He described it as “unfortunate” that stablecoin yield has turned into a central dispute between banks and the crypto sector, emphasizing that sharing yield with users does not undermine banks’ business models or competitive position. He told Yahoo Finance:

“They can also offer stablecoin products to their customers, just the same as crypto. This is not an unfair advantage in either way, and many banks are now applying for OCC bank charters themselves to start offering bank-like products to their customers. In the future, I don't think this is going to be an issue,” he continued, adding, “I think they're going to find opportunities to use these products and leverage them and offer new products to their customers and expand their businesses.”

The possibility for crypto platforms to provide rewards to stablecoin holders has become one of the most contentious topics in the broader regulatory discussion and has contributed to delays surrounding the CLARITY market structure legislation.

Pressure builds around the CLARITY Act

The proposed CLARITY Act aims to define regulatory authority over digital asset markets by dividing responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission, while also introducing a structured classification framework for cryptocurrencies. Concerns have emerged, however, that political developments could hinder its progress.

Officials and industry representatives have warned that the approaching 2026 US midterm elections could disrupt legislative momentum and potentially reverse parts of the crypto regulatory framework shaped under President Donald Trump’s administration.

Narrow window for legislation

“I think if the Democrats were to take the House, which is far from my best case, then the prospects of getting a deal done will just fall apart,” US Treasury Secretary Scott Bessent said on Friday.

“There's a window here. The window is still open, but it is rapidly closing,” Witt said, adding that the White House Crypto Council is aiming to have the CLARITY Act signed into law before the midterms “take all of the oxygen out of the room.”

Sources:

https://finance.yahoo.com/news/white-house-crypto-adviser-says-theres-no-time-to-wait-as-clarity-act-window-closes-195835577.html

https://cointelegraph.com/news/white-house-banks-shouldnt-fear-stablecoin-yield