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President Donald Trump has accused US banks of threatening the GENIUS Act and holding the CLARITY Act hostage, escalating a months-long standoff between the banking sector and the crypto industry over stablecoin returns.
This conflict threatens to scuttle the CLARITY Act before the 2026 midterm elections, leaving the US regulatory framework for cryptocurrencies incomplete at a crucial time.
Trump criticizes banks for conflicting returns on stablecoins
in Posted on Truth Social On Tuesday, Trump said the GENIUS Act — the landmark stablecoin law he signed last July — is “threatened and undermined by the banks,” and called on Congress to immediately pass market-structuring legislation.
Americans should make more money with their money, Trump wrote, adding that the banks are making record profits, and we will not allow them to undermine our strong crypto agenda, which will end up in China and other countries if we do not address the Clarity Act.
These statements mark the strongest presidential intervention in the legislative battle over stablecoin awards — a dispute that has stalled the crypto regulatory agenda in Washington.
Stablecoin Returns: The Fundamental Controversy
At the heart of the dispute is a provision in the GENIUS Act that prohibits stablecoin issuers from paying interest directly to holders. However, the law does not explicitly prevent third-party platforms such as Coinbase and Kraken from passing payments to users – a loophole that banks have called a “weakness”.
This arrangement allows Cryptocurrency exchanges get returns It collects reserve assets like US Treasury bills and distributes them to customers, giving them a competitive advantage over traditional savings accounts that often pay just 0.01%.
The Bank’s business groups, led by the Banking Policy Institute, have warned that this structure could lead to a deposit flow of up to $6.6 trillion – a figure taken from an analysis of the US Treasury Department. Bank of America CEO Brian Moynihan reiterated this concern in January, stating that interest-bearing stablecoins could transform about 30-35% of all commercial bank deposits.
Bank lobbyists led the move to close this loophole through the CLARITY Act, the crypto market structuring bill currently being debated by the Senate. The law will assign specific oversight roles to the SEC and CFTC, but has become an arena for debate over stablecoin returns.
Damon draws a line
Trump’s post came on the same day that JP Morgan Chase CEO Jamie Dimon made strong statements about the regulation of stablecoins. While speaking on CNBC, Damon argued That companies offering returns on stablecoin balances effectively act as banks and should be regulated as such.
Dimon proposed a compromise in which transaction-related rewards would be offered rather than inactive balances, but he drew a clear line on interest-like payments on holds. He cited capital requirements, FDIC insurance, anti-money laundering obligations, and mandates related to community lending as metrics that banks must adhere to — while cryptocurrency companies currently do not.
Coinbase CEO Brian Armstrong has publicly rejected this perception. Armstrong predicted that banks will eventually change their minds and demand their ability to pay interest on stablecoins, after which competitive pressure from digital assets becomes inevitable.
A group of more than 125 cryptocurrency companies, including Coinbase, Gemini and Kraken, launched a coordinated campaign against the banking lobby last year, arguing that reopening the performance provisions in the GENIUS Act would undermine the certainty that the market and innovators rely on.
The legislative clock is ticking
The White House has set a tentative date of March 1 for an agreement between the two parties. This term has passed without resolution. The CLARITY bill remains stuck in the Senate Banking Committee, with no announcement of a discussion date.
According to a regulatory analysis by Elliptic, the Senate Banking Committee was expected to vote on the bill in mid-January, but the hearing was postponed indefinitely after Coinbase withdrew its support over a proposed amendment that would restrict stablecoin rewards. Two White House meetings in early February failed to reach a compromise.
The OCC complicated matters further last week by publishing a 376-page legislative proposal under the GENIUS Act, with provisions that crypto insiders say could limit how partners of stablecoin issuers distribute rewards.
Senator Cynthia Lummis posted Trump’s message, adding: America can’t wait. Congress must move quickly to pass the Clarity Act.
The 2026 midterm election season is accelerating and with the summer break approaching, the window for legislation is narrowing. If an agreement does not emerge in the coming weeks, the United States risks losing momentum on a framework for regulating cryptocurrency that the White House and the industry consider critical to maintaining global competitiveness.
