Crypto Legislation Stalls as Banks Resist White House Compromise

Crypto legislation in the US has hit a roadblock as talks between lawmakers and banking representatives have reached an impasse. The Clarity Act, which aims to create clear regulations for cryptocurrency adoption, was expected to be a key component of President Donald Trump's agenda. However, banks have refused to support a compromise brokered by the White House on stablecoin rewards.

The compromise would allow stablecoin issuers and crypto firms to offer yield-bearing products and other rewards in certain circumstances, but not on idle holdings. Banks argue that this could lead to deposit flight, with Standard Chartered estimating that stablecoins could pull around $500 billion in deposits out of US banks by 2028.

Analysts predict that if the bill does not pass this year, it may be difficult to revive due to limited Senate floor time and the upcoming mid-term elections. The war in Ukraine has also added to the challenges facing the legislation.