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As US lawmakers continue to contest the legality of stablecoin rewards payouts under the CLARITY Act, a key White House official has expressed confidence that a legislative compromise is imminent.
Patrick Witt, executive director of the President's Council of Advisors for Digital Assets, spoke to Crypto In America this week and shared news of three closed-door meetings between representatives of the US crypto and banking industries regarding the bill.
During the third meeting, attendees “took a stab” at incorporating new language into the Digital Asset Market Clarity (CLARITY) Act, in an effort to allay the fears of their respective industries.
The banks fear that the crypto industry is attempting to “exempt” itself from the statutory “prohibition” on the payment of stablecoin yield, interest and rewards that they believe was established by the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
The crypto industry, on the other hand, does not see the GENIUS Act as imposing such a blanket prohibition, and remains confident that a carve-out can be made for so-called “activity-based” rewards.
“Yesterday was a big step forward,” Witt said of the third meeting. “We were getting down to individual text, line by line, trying to thread the needle between permitting activity-based rewards and addressing the concerns raised.
“I think we’ve narrowed the issue set considerably and had some clear call-outs for members to provide feedback on outstanding areas. The field of disagreement has shrunk considerably.”
The White House is operating to an ambitious deadline, with Witt expressing hope that a consensus on the rewards question can be reached by March 1, 2026.
Should this target be met, the CLARITY Act would return to the Senate Banking Committee for a markup of the revised text, potentially in March or April.
Following this, the bill faces reconciliation and must secure floor time in the Senate. Given the “tremendous time” and investment from both sides, there is a strong desire to advance the legislation and have it signed into law by the President.
However, the final scheduling of any future markup remains the prerogative of Senator Tim Scott (R-SC), the chair of the Senate Banking Committee.
From markup delay to closed-door negotiations
Originally, the Senate Banking Committee had scheduled two markup hearings for the CLARITY Act, on January 15 and January 27, 2026.
However, continued resistance to the bill from the US banking industry and from members of the committee led to both of these hearings being cancelled.
Witt noted that one of the “silver linings” of the postponement is that the respective sides of the debate have now had an extra month to work through issues that “would have been revisited later”.
He noted, for example, that reconciliation between the House bill that was passed in July 2025 and the Senate bill is “already somewhat underway”.
Witt said his White House team has been coordinating with key members of the House, including Representatives French Hill (R-AR) and Glenn Thompson (R-PA), two original co-sponsors of the bill.
Hill, as chair of the House Financial Services Committee, and Thompson, as chair of the House Committee on Agriculture, led a bipartisan group of five Republicans and three Democrats as original co-sponsors.
Together, they steered the CLARITY Act through a 294 - 134 vote on the House floor in July 2025.
According to Witt, Hill and Thompson have made clear that there are “must-haves” from the House bill that need to be preserved by the Senate. Witt said his team is “fully mindful” of their stance.
Crypto industry takes upper hand
Though closed-door negotiations continue, Witt’s description of these conversations suggest that the crypto industry is likely to emerge with its principal demands intact.
Brian Armstrong, CEO of Coinbase, who has played an active role in shaping the crypto industry’s negotiating position, has been similarly optimistic in his public statements on the issue.
“I'm confident we can achieve a market structure win-win that advances the president's crypto agenda while addressing the concerns of the banks,” he said on X earlier this month.
“We'll keep advocating for what's best for crypto users, especially core consumer benefits like rewards.”
Prior to the cancelled markup hearing in January, the position of the US banking industry was that the question of stablecoin yield, interest and rewards had already been settled by the GENIUS Act.
“It is the banking industry's view that this prohibition was intended to ensure that payment stablecoins function strictly as a means of payment, not as savings or investment products,” the American Bankers Association (ABA) said in an open letter to the Senate in December 2025.
“However, several exchanges and other digital platforms have interpreted the statute to exempt themselves and are now offering yield-like incentives to stablecoin holders.
“This emerging practice raises significant policy concerns as it risks disintermediating core banking activity, including deposit taking and lending, which harms local communities.”
From Witt’s description of the negotiations, it is now more likely that some form of “activity-based rewards” will be permitted by the CLARITY Act.
Whether those rewards must be non-interest-based, marketing rebates, transaction-linked incentives or structured outside the issuer balance sheet are the questions that are still to be resolved.
A factor adding urgency is the 2026 midterm election cycle. A spring signing would avoid the bill becoming a political football in the run to the polls.
Assuming a successful Senate floor vote in late spring, we could see a final reconciliation between the House and Senate as early as Q2 2026.
This would likely be followed by federal regulators implementing the first interim final rules in Q3 2026, allowing platforms to transition their rewards programs into compliance.
Ultimately, the stakes for the crypto industry are high. A clear, definitive agreement on rewards is anticipated to unlock billions in institutional capital that has been kept on the sidelines due to the yield uncertainty created by the GENIUS Act. The result of this compromise could define the future structure of the stablecoin market.
