U.S. President Donald Trump has accused the traditional banking lobby of undermining the GENIUS Act and holding the CLARITY Act “hostage” to protect their profits, injecting himself directly into the legislative battle over stablecoin yields.
The intervention marks a significant escalation in the fight over whether crypto platforms can offer interest-like rewards on stablecoins, a practice banks argue will trigger a mass exodus from traditional deposit accounts.
Trump Fires Back at Banks Over Stablecoin Standoff
In a post on Truth Social, Trump framed the dispute as an existential threat to American innovation.
“The Genius Act is being threatened and undermined by the Banks, and that is unacceptable — We are not going to allow it,” he wrote. “The U.S. needs to get Market Structure done, ASAP. Americans should earn more money on their money.”
The GENIUS Act, signed into law in July 2025, created the first federal framework for stablecoins but barred issuers from paying interest directly to holders. It left a critical question unanswered: whether third-party platforms like Coinbase could pass yield on to customers.
Banks have since lobbied aggressively to close this “loophole” in the CLARITY Act, the broader market structure bill that would establish clear jurisdiction for digital assets.
Their stance led to disagreement with some players in the crypto industry, which reached a boiling point in January when Coinbase CEO Brian Armstrong withdrew support for the bill ahead of a scheduled Senate markup, citing proposed amendments that would ban passive yield on stablecoins.
The White House set a deadline of March 1 for stakeholders to resolve their differences, yet no public compromise had emerged by that date.
“The Banks should not be trying to undercut The Genius Act or hold The Clarity Act hostage,” Trump posted. “They need to make a good deal with the Crypto Industry because that’s what’s in best interest of the American People.”
Earlier in the year, Geoff Kendrick, global head of crypto research at Standard Chartered, warned that stablecoins could pull as much as $500 billion in deposits from banks by 2028, with U.S. regional lenders most exposed.
Industry Cheers While Banks Face a Cartel Accusation
Trump’s remarks drew immediate praise from crypto leaders, with Ripple CEO Brad Garlinghouse calling it “an extremely pointed message… about what’s in the best interest of the American people.”
Senator Cynthia Lummis echoed the urgency, urging Congress to move quickly to pass the act. Meanwhile, Eric Trump, the president’s son and a World Liberty Financial co-founder, accused big banks of “mass panic” over losing the “digital finance race.”
However, some, like Charles Hoskinson, have slammed the legislation, with the Cardano founder describing it as a “horrific, trash bill,” and warning that its “security by default” framework would trap new projects under SEC jurisdiction and “destroy all future American cryptocurrency projects.”
He argued that while legacy tokens like Cardano might be grandfathered in, future innovation would be forced overseas. This puts him at odds with Garlinghouse, who has argued that “clarity beats chaos” and that the industry cannot let “perfection be the enemy of progress.”
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