Following a timely visit from a wealthy crypto stakeholder, U.S. President Donald Trump has accused the banking sector of holding up passage of digital asset market structure legislation.
On Tuesday, President Trump intervened in the banks v crypto ‘yield v reward’ debate in a major way. Trump posted the following text to his Truth Social platform, which deserves replicating in full:
“The Genius Act is being threatened and undermined by the Banks, and that is unacceptable — We are not going to allow it. The U.S. needs to get Market Structure done, ASAP. Americans should earn more money on their money. 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. The Genius Act was the U.S.A.’s first big step to make the United States the Crypto Capital of the World, and getting The Clarity Act done is the next step to finish the job and, most importantly, keep this big and powerful Industry in our Country. The Banks should not be trying to undercut The Genius Act, or hold The Clarity Act hostage. They need to make a good deal with the Crypto Industry because that’s what’s in best interest of the American People. This Industry cannot be taken from the People of America when it is so close to becoming truly successful. Thank you for your attention to this matter! President DONALD J. TRUMP”
(Explainer: The Senate Banking Committee’s digital asset market structure legislation (CLARITY) has been on hold since January. GENIUS, which was signed into law last year, prohibits stablecoin issuers from paying ‘yield’ to customers who hold their tokens. Banks want CLARITY to extend this ban to third-party platforms like the Coinbase (NASDAQ: COIN) exchange that pay ‘rewards’ to customers for holding stablecoins. The banks claim to fear a mass exodus of customers chasing higher rates of return. Crypto operators say what banks really fear is having to pay higher interest to compete for those customers.)
Since Coinbase abruptly withdrew its CLARITY support in January, White House crypto advisor Patrick Witt has presided over three meetings featuring reps from both the banking and crypto sectors. These efforts failed to produce a mutually acceptable compromise on the yield v reward issue.
While Coinbase was originally blamed for CLARITY’s lack of momentum—including by some in the White House—the pendulum has since swung to the banks being the baddies here. The day before Trump’s post, JPMorgan Chase (NASDAQ: JPM) CEO Jamie Dimon went on CNBC to warn that banks “feel strongly that rewards are the same as interest.”
Dimon claimed banks just want “a level playing field,” adding that if crypto platforms are “going to be holding balances and paying interest, that’s a bank. You should be regulated like a bank.” Dimon said banks didn’t fear competition, but competition needs to be “fair and balanced.” Exempting crypto platforms from regulatory guardrails imposed on banks will mean “the public will pay. It will get bad.”
The next day, Witt tweeted that “the deceit here is that it is not the paying of yield on a balance per se that necessitates bank-like regulations, but rather the lending out or rehypothecation of the dollars that make up the underlying balance. The GENIUS Act explicitly forbids stablecoin issuers from doing the latter. Stablecoins ≠ Deposits.”
Trump’s son Eric retweeted his father’s Truth Social post, adding that “Big Banks” are “doing everything they can to block the Crypto industry from offering real benefits, perks, and rewards on their platforms. They are the greatest hypocrites and are in mass panic given they know they are losing the digital finance race.”
Donald Trump Jr. didn’t comment directly but did retweet wealth manager James Thorne slamming Dimon for publicly expressing a desire for a level playing field while “what he really wants is to make sure nobody can offer you a better deal on your own money than tradtional [sic] banks can. The president is right to call the banks out on this.”
It’s perhaps worth remembering that President Trump sued both JPM and Dimon in January for ‘debanking’ him following the January 6, 2021, insurrection at the Capitol. Trump, who is seeking $5 billion in damages from JPM, probably didn’t need much motivation to take a position that might cause Dimon some grief.
Armstrong as Trump-whisperer?
But Trump’s intervention was likely more a case of a deep-pocketed influencer whispering in his ear. On Tuesday, Politico’s Jasper Goodman reported that Coinbase CEO Brian Armstrong “met privately” with Trump “just before” Trump’s Truth Social post.
Goodman noted that Trump’s claim that CLARITY is “being threatened and undermined by the Banks” echoes Coinbase’s position. Trump’s post also repeated verbatim language uttered by Armstrong (“Americans should earn more money on their money”) in his defense of stablecoin rewards.
After his post, Trump reposted a screenshot of an Armstrong tweet praising the president for having “delivered on his campaign promise to make America the crypto capital of the world.” Trump also posted a clip of an Armstrong interview that contained similar praise for the president.
To add yet another layer to this intrigue, recall that Dimon reportedly got in Armstrong’s face at the World Economic Forum (WEF) in Davos this January. The Wall Street Journal claimed Dimon told Armstrong he was “full of shit” after watching one too many TV interviews in which the Coinbase CEO pinned all the blame for CLARITY’s lack of progress on the banking sector.
Armstrong may feel that his thumb on the scale has tipped the balance of this debate for good. But recall that Trump is notorious for adopting the positions of the last person to speak to him. This includes taking that person’s position on an issue even when it directly contradicts Trump’s previous position. So if Trump has any imminent appointments with bankers, this flip could flop fast.
Armstrong has yet to respond publicly to the Politico report, while Coinbase’s chief legal officer, Paul Grewal, simply added a ‘Yep’ to his retweet of Trump’s post, while the company’s chief policy officer, Faryar Shirzad, added a “Thank you Mr. President” to his retweet.
Trump will be well aware that Coinbase is a key financial contributor to the Fairshake political action committee (PAC) that is preparing to spend a couple of hundred million dollars to ensure the election of crypto-friendly pols (mostly Republicans) in November’s midterm elections.
Coinbase has also contributed significantly to Trump’s inaugural committee, Trump’s White House ‘ballroom’ project, and even sponsored Trump’s military parade in Washington, D.C. last July. It’s anyone’s guess what (if anything) Armstrong might have promised Trump during this most recent meeting, but nothing really seems out of bounds anymore.
What all this means for CLARITY remains unclear, as there’s no guarantee the banks will acquiesce to Trump’s public pressure. Other significant CLARITY obstacles remain, including the ‘ethics’ issue, which directly targets the propriety of the Trump family’s numerous crypto ventures. And Trump’s latest Iranian adventure could derail any number of bills attempting to beat the midterm deadline.
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Anti-CBDC push finds new legislative vehicle but can it stick this time?
While CLARITY’s progress may have stalled, the even longer-stalled effort to prohibit the federal government from issuing a central bank digital currency (CBDC) is finally advancing.
For years, Republicans in Congress have tried to pass legislation that would prohibit the U.S. Federal Reserve from even thinking about issuing a CBDC. The House of Representatives passed the CBDC Anti-Surveillance State Act in 2024, but the bill died in the Senate before that year’s elections.
In 2025, the White House endorsed the anti-CBDC push in a report issued by the President’s Working Group on Digital Assets. The Act was reintroduced by Rep. Tom Emmer (R-MN) and attached to a must-pass defense funding bill, but the language was removed before the vote.
But hope springs eternal, and the anti-CBDC language was included in Title X of the Senate Banking Committee’s 21st Century ROAD to Housing Act. The housing bill is advancing through the Senate post-haste with the White House’s blessing (including a sloppily worded endorsement of the CBDC language). Whether the anti-CBDC provision survives the final vote in the Senate—as well as the subsequent vote in the House—remains to be seen.
However, while the progress will be welcomed by those who view CBDCs as something just shy of communism, fascism, and cooties all rolled into one, the new language contains a sunset clause that would render the ban moot on December 31, 2030, assuming it’s not reapproved by whoever controls Congress five years from now.
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Kraken makes crypto history with Federal Reserve ‘skinny’ master account
The Kraken exchange made history on Wednesday by becoming the first digital asset bank to gain access to a Federal Reserve master account. Since 2020, Kraken Financial has been registered as a special depository institution (SPDI) in Wyoming, but Fed access means Kraken can connect directly to core payment rails without relying on Fed-approved intermediaries.
The account in question is the first so-called ‘skinny’ master account the Fed has issued since Fed Gov. Christopher Waller announced the concept last October. A skinny account—since rebranded as ‘payment accounts’—is subject to restrictions not imposed on traditional master accounts. These limits include balance caps, no payment of interest on said balances, no daylight overdraft privileges, no discount window borrowing, etc.
Kraken’s account was approved for an initial one-year term by the Federal Reserve Bank of Kansas City, which used the phrase “limited purpose account” in its official release. The account includes “restrictions and limitations tailored for Kraken Financial’s business model and risk profile that are appropriate to mitigate risks identified in the [Account Access] Guidelines.”
Kansas City Fed President Jeff Schmid said, “the payments landscape is actively evolving. Throughout this transformation, the integrity and stability of the U.S. payments system remain our priority.”
In a blog post issued Wednesday, Kraken said it would proceed with a “phased rollout” of its new Fed privileges, “initially focused on facilitating institutional client activity.”
Kraken co-CEO Arjun Sethi said the approval “marks the convergence of crypto infrastructure and sovereign financial rails … It gives us the ability to settle directly on Fedwire, reduce dependency on correspondent banks, and integrate regulated fiat liquidity directly into digital asset markets.”
Sethi added that “over time, this architecture could enable atomic settlement between fiat and crypto, institutional-grade cash management integrated with digital asset custody, and programmable financial products built within a fully regulated framework.”
Sen. Cynthia Lummis (R-WY), one of the most prominent crypto supporters in Congress, celebrated the news, telling CNBC it represented “a huge step forward” for the sector. Lummis went on to predict that the “21st century financial services industry” would see “banks buying digital asset companies, digital asset companies buying banks,” allowing banks to serve customers in both fiat currencies and digital assets.
Custodia Bank, another Wyoming SPDI, tweeted its congratulations to Kraken, noting that Custodia’s master account application was filed not long after Kraken filed in October 2020. The Fed’s previous leadership denied Custodia’s application, and Custodia’s legal appeals have been rejected by federal courts. But it seems Custodia’s long wait may be at an end.
Not everyone cheered the news. The Bank Policy Institute (BPI) issued a statement noting that Kraken was granted this ‘limited purpose’ account “before the Federal Reserve Board has finalized its policy framework for those accounts.” The BPI said the Fed had “ignore[d] public comment” and offered “no transparency into the process for approval.”
Similarly, the Independent Community Bankers of America (ICBA) said it was “very concerned” that the Fed was ignoring the “significant risks to expanding direct Fed account access to institutions that operate outside the traditional banking regulatory framework.”
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CFTC preps prediction market, perp futures guidance, hires new enforcement chief
Meanwhile, the Commodity Futures Trading Commission (CFTC) is signalling that yet more regulatory guardrails are coming down.
Last month, CFTC chair Michael Selig pushed back hard on states seeking to assert their authority over prediction markets, which many states view as unauthorized gambling operators. According to Selig, the CFTC has sole authority over prediction markets that offer what the regulator calls ‘event contracts.’ Selig views the state-level legal actions against the likes of Kalshi, Polymarket, and a growing number of crypto operators as a usurpation of the CFTC’s authority.
On March 3, Selig and Securities and Exchange Commission (SEC) chair Paul Atkins appeared on a panel at the Milken Institute Future of Finance event, in which Selig declared that state and federal rules “can exist in parallel.” Selig claimed the states are “getting a little ahead of themselves” in targeting prediction markets, noting that “we certainly don’t go into casinos to evaluate whether they’re offering legal over-the-counter swaps.”
Selig said the CFTC would be offering prediction market guidance “in the very near future … We’re going to be setting very clear standards as to what can be self-certified in our markets and what cannot.” Selig added that the CFTC is also “planning to go forward with an advanced notice of proposed rulemaking in the near future that will set the stage for more fulsome rulemaking.”
Selig also revealed that the CFTC is planning to revamp the derivatives market to allow U.S. crypto operators to offer perpetual futures contracts. Noting that companies like Coinbase currently offer these contracts only via its Bermuda-based exchange, Selig said: “We’ve got to bring that back to the United States.”
Selig said the CFTC is “working towards getting perpetual futures, true perpetual futures, not long-dated contracts, here in the U.S. within the next month or so. So we do expect to announce that very soon.”
Meanwhile, on March 2, the CFTC appointed former federal prosecutor David Miller as the regulator’s new director of enforcement. Miller replaces Paul Hayeck, who’s served as acting enforcement director since last June but will now go back to his day job as chief of the Enforcement Division’s Complex Fraud Task Force.
The CFTC has largely halted enforcement actions against crypto operators that don’t involve outright fraud. Miller, who has toiled for private law firms since leaving the public sector, previously defended Ishan Wahi, the former Coinbase product manager who was sentenced to two years in prison in 2023 for leaking inside information regarding which tokens the exchange was preparing to list.
For the record, before Wahi’s guilty plea, Miller’s defense involved claiming that the tokens in question were neither securities nor commodities and thus no insider trading had occurred. And yet, Selig celebrated Miller’s “proven track record of defending market participants against the novel legal theories of overzealous regulators and plaintiffs.” (We suspect Miller will fit right in.)
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Fairshake’s midterm might
Getting back to the midterm elections, Fairshake drew first campaign blood in Texas on Tuesday night, as Rep. Al Green (D-TX) was forced into a runoff vote against challenger Christian Menefee after neither candidate claimed more than 50% of the primary vote. The reliably crypto-critical Green’s House district was eliminated after Texas embarked on a major gerrymandering effort, and the Fairshake-affiliated Protect Progress PAC earmarked $1.5 million for anti-Green ads.
Last month, Fairshake was tipped to have allocated “at least $1 million each” to defeat two Democratic primary candidates running for House and Senate seats in Illinois. But Axios reported Wednesday that Fairshake is said to be spending $7 million to defeat Illinois Dem Senate candidate Juliana Stratton in what a Stratton spokesperson called Fairshake’s “largest investment in any race across the country.” (At least, so far.)
Similar to the pattern established during the 2024 election cycle, none of the ads Fairshake is running in Illinois mention crypto, instead alleging impropriety in candidates’ ties to disgraced former pols and historic legal issues. This undermines the digital asset sector’s claims of the massive numbers of ‘crypto voters’ who can tip the election scale one way or the other, but we suspect everyone understands that by now.
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Source: https://coingeek.com/trump-coinbase-ceo-team-up-to-thwart-jpmorgan-jamie-dimon/
