Patrick Witt Says Banks Oppose CLARITY Act Despite Stablecoin Interest Ban

Patrick Witt criticized U.S. banks after 134 banking executives and leaders urged the Senate to revise the CLARITY Act’s stablecoin provisions. The dispute centers on Section 10404, which restricts interest or yield on payment stablecoins.

Banks Seek Wider Stablecoin Reward Ban

The banking group asked Senate leaders to tighten language covering stablecoin rewards, bonuses, and incentives. The letter said firms could structure benefits in ways that create the same economic effect as interest.

The signatories included leaders tied to Bank of America, U.S. Bank, Zions Bank, First Hawaiian Bank, Bank of Hawaii, Hancock Whitney Bank, FNBO, Eastern Bank, Lake City Bank, and Univest Financial Corporation.

The group said payment stablecoins should remain tools for transactions, not long-term holding products. They argued that rewards based on balance size or holding duration could pull funds away from bank deposits.

Bank leaders warned that deposit outflows could weaken local credit funding by hundreds of billions of dollars. They said households, small businesses, farmers, and local employers depend on deposits as a major lending source.

Patrick Witt Pushes Back on Bank Position

Patrick Witt, a White House crypto adviser, responded by pointing to what he described as a contradiction in the banking sector’s position. He wrote, “Banks: We must ban the payment of interest on stablecoins to protect community bank lending!”

Witt added, “Clarity Act: Bans payment of interest on stablecoins.” He then wrote, “Banks: The Clarity Act must be stopped, or it will destroy community bank lending!!!”

The comments came as some banking groups supported a stablecoin interest ban while still opposing parts of the wider crypto market structure bill. Their latest request seeks stronger language to stop indirect yield arrangements.

Goldman Sachs CEO David Solomon has expressed support for the CLARITY Act, even as banks continue debating stablecoin rules. His stance contrasts with banking groups pressing lawmakers for tighter limits before final passage.

Senate Faces Narrow CLARITY Act Window

Senate Republicans recently released an updated 616-page CLARITY Act draft. The bill combines Senate Banking and Agriculture Committee texts into one digital asset market structure framework.

The draft gives the CFTC authority over spot markets for digital commodities. The SEC would oversee investment contract assets under the proposed framework.

The bill also seeks to protect software developers, blockchain developers, and decentralized networks that do not hold customer assets. The updated draft includes White House-backed ethics rules covering digital asset issuance by federal officials and spouses.

Senate leaders had planned a procedural vote on the CLARITY Act before the August recess. However, Senate Majority Leader John Thune prioritized Trump nominations and the Lindsey O. Graham Sanctioning Russia Act of 2026, narrowing the timeline before August 8.