U.S. Senate To Vote On America's Economic Future

After the bill passed, some banking industry executives began lobbying Congress to restrict the rewards paid to Stablecoin holders. While the GENIUS Act regulated Stablecoins, it included a provision allowing consumers to earn rewards on crypto holdings, as credit card companies do.

Rewards encourage competition and benefit consumers. Congress would never consider banning credit card rewards, so it should not ban cryptocurrency rewards, which would eliminate a valuable consumer right. Removing these rewards would be a victory for China. Recently, the People’s Bank of China announced it would start paying interest on the Digital Yuan to attract more customers.

Allowing rewards is good for competition and good for consumers, who are best protected by choice and innovation. Rewards encourage platforms to compete for customers, and when that happens, consumers win.

To preserve these benefits while addressing banking industry concerns, U.S. Senator Thom Tillis (R-NC) and U.S. Senator Angela Alsobrooks (D-MD) forged an agreement included in the CLARITY Act. It prohibits intermediary rewards that are economically or functionally equivalent to interest or yield on a bank deposit. It allows Stablecoin rewards only for activity-based actions, such as a purchase or another qualifying action.

Despite this agreement, some members of the banking industry still oppose the CLARITY Act, arguing that Stablecoin rewards will lead Americans to withdraw deposits from community banks and buy Stablecoins, limiting their ability to issue loans. However, there is no evidence that these worries are valid, as an analysis from Charles River Associates found no significant relationship between Stablecoin adoption and deposit levels at community banks. In fact, over the last seven years, as Stablecoin growth has occurred, community bank deposits grew by 26%, or $482 billion, showing their resilience and financial health.

Another important factor is that Stablecoins and community banks serve different constituencies. While community bank customers tend to be older, primarily Baby Boomers, 67% of Stablecoin holders are under 45. This suggests the substitution risk is overstated.

In addition, as the Blockchain Association stated, “it is difficult to reconcile claims” that bank deposits have been constrained. Currently, banks hold $2.9 trillion in balances at the Federal Reserve. These funds are generating interest rather than being used for loans.

This debate matters especially in Louisiana, the first state to accept cryptocurrency for government services. Louisiana set the standard for putting innovation into action. Today, approximately 850,000 residents own cryptocurrency, or 18.5% of the population. These statistics show that people in Louisiana have embraced this economic revolution and President Donald Trump’s goal of making America the “crypto capital of the world.”

Passing the CLARITY Act will allow America to lead the cryptocurrency industry and benefit community banks, establishing a clear regulatory framework for digital assets. It will permit banks to compete in this market by participating in digital asset custody, payments, tokenization, and related markets. Community banks are positioned to benefit from Stablecoin settlement because it could allow a smaller community bank to settle payments as quickly and across the same distances as a megabank. Stablecoin settlement would allow community banks to expand their payment capabilities and build on one of their strongest advantages: knowing their customers.

If passed, the CLARITY Act would create the largest expansion of bank powers in decades, allowing all banks to benefit, regardless of size. If it fails, banks will not receive the new powers needed to enter and meaningfully compete in digital-asset markets.

The CLARITY Act is also extremely important for the millions of Americans who own cryptocurrency. Currently, no federal laws protect these Americans. President Trump intends to change that situation. He wants to ensure that America leads, protects consumers, encourages innovation, and does not fall behind other countries.

Several weeks ago, at a White House event with technology leaders, President Trump said, “New financial technologies are extending this American dominance into the 21st century, and that’s why we’re focused on creating a clear regulatory framework for the pioneers and builders, like the people with me here.”

Furthermore, Trump asserted that “We are also in the very beginning of a revolution in financial technology…(which) is creating jobs and great wealth.” The President implored Congress to “take the next step by passing the CLARITY Act…(to) keep us ahead of China…(and) open the door to innovation and innovators.”

The legislation also has the support of Brian Armstrong, CEO of Coinbase. He said the CLARITY Act was a “good bill for the banks; it gives them 13 new powers to…grow their business. It’s good for the crypto companies, and, most importantly, it’s good for the 50 million or so Americans who own crypto.”

As noted by Patrick J. Witt, Executive Director, President’s Council of Advisors for Digital Assets, the GENIUS Act reinforced “dollar dominance,” and, if passed, the CLARITY Act will “modernize our capital markets and ensure American financial leadership for decades to come.”

The bill will also help our economy thrive by allowing free markets to function properly and by enabling digital assets and traditional banking to work together and complement each other.

President Trump has made it clear that he values individual freedom, including financial freedom. He is also insistent that America must lead the world on digital assets, which is why passing the CLARITY Act is so essential.