White House crypto adviser Patrick Witt accused banks of trying to stop legislation that already bans what they want banned, after 134 banking executives pressed the Senate to widen the CLARITY Act's limits on stablecoin rewards. Polymarket traders have cut the bill's 2026 passage odds to a record-low 27% as the Senate calendar narrows before the Aug. 8 recess.
Witt pushed back after 134 banking executives and industry leaders sent Senate lawmakers a letter seeking changes to Section 10404 of the CLARITY Act, the provision that restricts issuers from paying interest or yield on payment stablecoins. He framed the request as inconsistent with the industry's wider opposition to the market structure bill.
The adviser's post restated the banks' own position, writing: "Banks: We must ban the payment of interest on stablecoins to protect community bank lending!" He then noted that the CLARITY Act already bans interest payments before criticizing banks that still warn the bill could damage community lending.
Banks want the reward ban widened
Banking groups want lawmakers to extend the restriction to rewards, bonuses and other incentives offered by stablecoin firms or their partners. The group said payment stablecoins should function as transaction tools rather than long-term savings products, and warned that rewards tied to a user's balance or holding period could encourage customers to move money out of insured bank accounts.
Signatories included leaders tied to Bank of America, U.S. Bank, Zions Bank and Bank of Hawaii, among others. They claimed that large deposit outflows could reduce the funding available for lending to households, farmers, small businesses and local employers, and estimated that the effect could drain hundreds of billions of dollars from the traditional banking system.
However, Goldman Sachs CEO David Solomon has taken a different position by supporting the CLARITY Act. His stance separates the investment bank from groups demanding tighter stablecoin provisions before the Senate moves forward.
Passage odds fall to a record-low 27%
Polymarket traders have reduced the probability that the legislation becomes law in 2026 to 27%, its lowest recorded level. Galaxy Digital has separately lowered its passage estimate to 30% as negotiations extend deeper into the legislative year.
Senate Republicans recently released an updated 616-page draft combining texts from the Senate Banking and Agriculture committees. The framework would place digital commodity spot markets under the Commodity Futures Trading Commission while allowing the Securities and Exchange Commission to oversee investment contract assets.
Senate delay leaves little time before recess
Senate Majority Leader John Thune postponed CLARITY Act action while lawmakers considered federal nominees and the Lindsey O. Graham Sanctioning Russia Act of 2026. Senators voted on July 28 to advance the sanctions package, leaving fewer working days before the Aug. 8 recess.
CoinGape reported that Senate leaders had planned a procedural vote before the August recess. Crypto industry participants have urged Thune to begin the cloture process before lawmakers leave Washington, even if a final vote cannot occur.
Sources: crypto.news, CoinGape
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