Trump sides with crypto firms in stablecoin dispute

US President Donald Trump on Tuesday sided with the crypto industry in its monthslong dispute with banks over stablecoin yield.

That row has threatened to derail negotiations over the Clarity Act, a bill that would create a long-sought regulatory framework for cryptocurrencies in the US.

“Americans should earn more money on their money,” Trump wrote on his social media platform, Truth Social.

“The Banks are hitting record profits, and we are not going to allow them to undermine our powerful crypto agenda that will end up going to China, and other countries if we don’t get the Clarity Act taken care of.”

In a bid to boost stablecoin adoption or win market share, some issuers have paid customers yield on their digital dollars.

Last year’s stablecoin legislation, the Genius Act, banned the practice, in part because banks feared customers would abandon traditional checking and savings accounts for stablecoins, which often pay substantially higher interest rates.

But it was unclear whether the law banned third-party crypto companies, such as exchanges, from paying interest on customers’ stablecoin holdings.

Banks have lobbied lawmakers to include language in the Clarity Act that would close this supposed loophole. Crypto companies, in turn, have slammed banks for attempting to relitigate components of a bill more than six months after it was signed into law.

The sides appeared to reach a compromise in January. A revised draft of the Clarity Act banned companies from paying passive yield on stablecoins — but it allowed them to offer rewards or incentives on activities such as transactions, payments, transfers, remittances, and providing liquidity in DeFi protocols.

But Coinbase CEO Brian Armstrong torpedoed the bill on the eve of a scheduled vote when he pulled his support, citing the ban on passive yield, among other things.

Senator Tim Scott, a Republican from South Carolina and the head of the Senate’s Banking Committee, delayed the vote indefinitely. Despite regular meetings at the White House, representatives from the crypto and the banking industries have made little progress since.

Armstrong’s power play even led to a report the White House had soured on Coinbase, though Armstrong denied the claim in a post on X.

Still, the deadlock over the Clarity Act has jeopardized Trump’s plan to make the US the “Crypto Capital of the World,” as he put it on Tuesday.

“The Genius Act is being threatened and undermined by the banks, and that is unacceptable,” he wrote. “The US needs to get market structure done, ASAP.”

Trump family company DT Marks DEFI LLC holds a 38% stake in World Liberty Financial, which issues a stablecoin called USD1.

Eric Trump — the president’s son and a co-founder of World Liberty — also weighed in on the dispute on Tuesday.

“The ‘Big Banks’ — the very institutions that have held a monopoly and screwed their customers for years, offering near-zero yields on retail Money Market Accounts while crushing low-balance accounts with exorbitant fees — are now doing everything they can to block the Crypto industry from offering real benefits, perks, and rewards on their platforms.," he wrote on X.

“They are the greatest hypocrites and are in mass panic given they know they are losing the digital finance race!” he added, before tagging World Liberty.

Democrats have accused the 79-year-old president of self-dealing, foreign influence, and obstruction of justice stemming from his family’s involvement in crypto and his attempts to push pro-crypto legislation.

“President Trump’s assets are in a trust managed by his children. There are no conflicts of interest,” Anna Kelly, the deputy press secretary, told DL News in January.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at [email protected].