White House Meeting Could Unfreeze the CLARITY Act This Week, but Crypto Rewards May Be the Price

The White House Steps In to Break a Crypto Deadlock

The most important piece of crypto legislation in U.S. history has been frozen for weeks, and the White House is about to intervene. On February 10, senior officials from the President's Council of Advisors for Digital Assets will convene a closed-door meeting with Wall Street banking executives and cryptocurrency industry leaders to address the single issue holding up the Digital Asset Market Clarity Act: whether crypto platforms should be allowed to offer stablecoin rewards to users.

The meeting comes after the Senate Banking Committee postponed its planned January 15 markup of H.R. 3633, leaving no replacement date on the committee calendar as of February 9. The CLARITY Act, which passed the House of Representatives last summer with bipartisan support, was supposed to be the crown jewel of the administration's crypto policy agenda. Instead, it has become a battleground between two of the most powerful lobbies in American finance.

A $6 Billion Question That Banks and Crypto Cannot Agree On

The math tells the story. At the current stablecoin supply of roughly $309 billion, annual rewards at 1.5% to 2.5% represent between $4.6 billion and $7.7 billion flowing to users. Under Bernstein's 2026 forecast of $420 billion in stablecoin supply, that pool grows to $6.3 billion to $10.5 billion. By 2030, Citi projects annual stablecoin rewards could reach $28.5 billion to $47.5 billion under base-case scenarios.

Banks see those numbers and see an existential threat. The Wall Street Journal reported Treasury estimates suggesting a potential $6.6 trillion deposit drawdown under certain scenarios if stablecoin yields are left unrestricted. Community and regional banks, already under pressure from high-yield savings alternatives, argue that letting crypto platforms offer 3% to 5% on dollar-pegged tokens would accelerate deposit flight on a scale the FDIC was never designed to handle.

The crypto industry sees the same numbers and sees consumer choice. Senator Tim Scott (R-SC), the Senate Banking Committee chairman, has drawn a sharp line: stablecoins maintain 1:1 reserve backing, while banks operate on fractional reserves with FDIC guarantees. "The goal is to make the U.S. the global crypto capital while protecting consumers and preserving financial stability," Scott said, framing the debate as competition enhancing consumer welfare rather than creating systemic risk.

What the Senate Draft Actually Says

The 278-page Senate Banking Committee draft released on January 12 draws a deliberate distinction. It prohibits digital asset service providers from offering interest or yield to users for simply holding stablecoin balances. But it allows stablecoin rewards or activity-linked incentives.

That distinction is everything. The existing GENIUS Act (Public Law 119-27) already prohibits stablecoin issuers from paying holders interest or yield directly. The CLARITY Act debate is about whether that restriction extends to affiliated platforms and intermediaries, specifically exchanges like Coinbase that offer rewards through profit-sharing arrangements with stablecoin issuers.

Coinbase reported $355 million in stablecoin revenue during Q3 2025, supported by approximately $15 billion in average USDC balances. That represented 56% of its total net income for the quarter. Bloomberg reported that Coinbase may withdraw support for the CLARITY Act entirely if language moves beyond disclosure requirements to substantive restrictions on rewards, a threat CEO Brian Armstrong has since made good on.

The legislative fight comes down to four variables: whether requirements remain informational or impose caps, whether scope is limited to issuers or extended to affiliates, whether "reward" captures pass-through reserve yield economics, and whether enforcement relies on statutory clarity or agency discretion.

Why Coinbase Walked and What It Means for Crypto Users

Coinbase's withdrawal of support was a seismic moment for the CLARITY Act coalition. Armstrong cited draft amendments that would "kill rewards on stablecoins, allowing banks to ban their competition." The company currently advertises 3.50% rewards on USDC through Coinbase One, a rate that varies by region.

But the crypto industry is not unified. Ripple leadership described the Senate effort as progress toward workable market rules, and other executives emphasized that compromise remains possible during markup discussions. The split exposes different business models: exchanges that generate revenue from stablecoin rewards have everything to lose, while protocol-focused firms may prioritize regulatory clarity over reward preservation.

For crypto card users, the stakes are direct. Many cashback programs and staking rewards are funded by the same yield economics under debate. If the CLARITY Act classifies platform rewards as prohibited interest, it could reshape how crypto cards structure their incentive programs. Cards that offer rebates tied to spending activity may survive, while those offering passive yield on held balances may need to restructure.

The Compromise That Could Reshape Crypto Card Rewards

The most likely outcome, based on public reporting and legislative language, is a partial compromise. Programs branded as "rewards" could survive if tied to activity or membership constructs, while "passive" balance-based payouts face constraints through statutory definitions or implementing rules.

That would shift product design toward payments rails, card programs, and usage incentives rather than simple APY for holding. In practice, this means crypto cards that reward spending, like the Crypto.com tiered cashback system or Nexo's credit line model, may benefit from regulatory clarity. Cards that depend on passive stablecoin yield to fund rewards may face restructuring costs.

The House version of the CLARITY Act includes explicit self-custody rights and DeFi carve-outs labeled as "DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT." That means decentralized protocols offering yield remain untouched regardless of the stablecoin rewards outcome, a detail that could push innovation further toward DeFi and away from centralized platforms.

Patrick Witt, Executive Director of the President's Council, has called the discussions "constructive, fact-based, and solutions-oriented." The White House has given both sides a deadline: deliver compromise language on stablecoin yields by the end of February 2026, or risk further delays that could kill the bill in the current session.

FAQ

What is the CLARITY Act? The Digital Asset Market Clarity Act (H.R. 3633) is a comprehensive crypto market structure bill that passed the House of Representatives and is pending Senate markup. It would establish clear regulatory frameworks for digital assets, including rules around stablecoin rewards.

Why are stablecoin rewards controversial? Banks argue that crypto platforms offering 3% to 5% yields on dollar-pegged stablecoins would divert deposits away from traditional banking, threatening financial stability. Crypto firms counter that stablecoins maintain full 1:1 reserves, making the comparison to fractional-reserve banking inaccurate.

How does this affect crypto card rewards? If the CLARITY Act restricts passive stablecoin yields, crypto cards that fund rewards through balance-based interest may need to restructure. Cards that tie rewards to spending activity or membership programs are more likely to survive under proposed compromise language.

When will the CLARITY Act be voted on? The Senate Banking Committee postponed its January 15 markup with no replacement date. The White House has set an end-of-February deadline for compromise language on stablecoin yields before markup can proceed.

Overview

The White House is convening crypto and banking leaders on February 10 to break the legislative deadlock over the CLARITY Act, the most significant crypto market structure bill in U.S. history. The core dispute: whether crypto platforms can offer stablecoin rewards worth $4.6 billion to $10.5 billion annually. Banks want a full ban to protect deposits. Crypto firms, led by Coinbase (which earned $355 million from stablecoin revenue in Q3 2025 alone), call it anti-competitive. The likely compromise would preserve activity-based rewards while restricting passive yield, a shift that could reshape how crypto cards structure their incentive programs. The White House has set an end-of-February deadline for both sides to deliver compromise language or risk killing the bill.