White House Hints at "Clarity Act" Progress as Federal Stablecoin Baseline Comes Into View

Patrick Witt, executive director of the President's Council of Advisors for Digital Assets and the White House's top crypto adviser, said Monday that talks on the Digital Asset Market Clarity Act have moved well past the earlier stalemate over stablecoin yield. He said several remaining disputes are being worked through simultaneously in private negotiations. Witt's comments are the strongest signal so far that Congress is close to creating a federal minimum standard for payment stablecoins. The White House's support for passage is not in doubt. The bigger uncertainty is timing: analysts warn the Senate Banking Committee still needs to hold a markup hearing, and failing to advance the bill by May 2026 could push the effort beyond the November midterms. Key points - Yield compromise still stands: Witt said the bipartisan deal on stablecoin yield—the main flashpoint for the banking industry—remains intact and is a "must-have" condition for resolving the rest. - Secondary issues nearing closure: Negotiations are said to be close on DeFi-related illicit finance safeguards and limits on senior government officials profiting from crypto, a Democratic priority aimed at President Trump. - Senate Banking markup still unscheduled: The bill cannot reach a full Senate vote without committee markup. A planned hearing was derailed in January 2026 after bank lobbyist objections and has not been reset. - Federal Reserve role remains contested: A central dispute is whether the Fed would keep veto power over state-chartered stablecoin issuers. That decision could determine whether issuers such as Circle's USDC gain direct access to federal payment infrastructure. - Banks remain divided: The American Bankers Association criticized a White House economic report Monday that played down the deposit risks of yield-bearing stablecoins, underscoring ongoing industry splits. - Midterm calendar pressure: Sen. Bill Hagerty and Sen. Cynthia Lummis have pointed to a late-April markup target. Missing it could delay action until 2027. - What to watch: Updated legislative text on stablecoin yield is expected after the Easter recess following final talks with banking industry stakeholders. What a federal "floor" would change The Clarity Act's central shift is the creation of a nationwide baseline rule set—a federal regulatory floor—that every payment stablecoin issuer must meet even if it operates under a state charter. Today, issuers largely navigate a patchwork of state money-transmission licensing, without uniform federal requirements for reserves, capital, or disclosures. Supporters say that uncertainty has been a major obstacle to broad institutional use for settlement and cash management. Under the proposal, issuers would have to maintain 1:1 reserve backing in high-quality liquid assets, satisfy federal safety-and-soundness expectations, and comply with AML and illicit finance controls. Witt said DeFi-specific protections remain under final negotiation. The DeFi provisions are seen as consequential because they influence whether decentralized protocols that route stablecoin liquidity would face issuer-level compliance duties or be treated as separate market actors—a distinction that could shape how USDC and competing stablecoins function across secondary markets. Fed oversight is viewed as the highest-stakes issue for institutions. Negotiators are said to be focused on whether the Fed should retain override authority over state-regulated issuers—a systemic-risk backstop that would also give the central bank leverage over which issuers can access federal payment rails. For Circle, direct access could lower settlement-layer counterparty risk and expand institutional channels typically unavailable to nonbank entities. Deputy Treasury Secretary Scott Bessent has urged passage in spring 2026, citing the midterm timeline and framing the effort as foundational market-infrastructure legislation rather than incremental cleanup. Yield limits and the banking lobby's concern The current yield compromise addresses banks' argument that interest-like stablecoin returns could drain deposits. Bank of America CEO Brian Moynihan warned in February that trillions of dollars could shift into yield-bearing stablecoins if Congress permitted returns resembling interest. Witt previously floated language at ETHDenver in February that would limit stablecoin rewards to "activities or transactions" rather than balances, with penalties up to $500,000 per day for violations. That structure appears to have informed the bipartisan framework now holding. A similar legislative tension is playing out abroad, including Japan's push to reclassify crypto as a financial instrument, where the core debate also centers on how digital assets fit within banking and payment-system hierarchies.