U.S. Treasury Secretary Pushes to Pass a Crypto Law – Not Everyone Agrees

The bill, which would create the first comprehensive federal framework for digital asset markets outside of stablecoins, passed the House in July 2025 by a 294-134 vote but has since been effectively frozen in the Senate for more than 260 days over a single contentious issue: whether stablecoin issuers should be allowed to pay interest or yield to holders.

The Competitive Urgency Argument

In a WSJ op-ed, Bessent made his argument, which is primarily one of competitive urgency. Without a defined federal framework, he wrote, digital asset development is migrating to Singapore, Abu Dhabi, and other jurisdictions that have moved faster on regulation. One in six Americans currently holds some form of digital assets, and the global crypto market cap sits at approximately $3 trillion, yet the entities and platforms managing that capital continue to operate without clear regulatory boundaries in the United States. In Bessent’s framing, that ambiguity is not neutral – it actively pushes business and talent offshore while leaving anti-money-laundering compliance weaker than it would be under a defined regulatory perimeter.

The bill itself attempts to resolve a longstanding jurisdictional dispute between the SEC and the CFTC. Under the CLARITY Act, the CFTC would take primary regulatory authority over digital commodity spot markets, while assets that qualify as investment contracts would remain under SEC oversight. That division is significant because it would provide legal clarity to exchanges, token issuers, and institutional investors who have operated in a grey area for years, often facing enforcement actions from regulators whose authority over their activities was itself disputed.

Building on the GENIUS Act

The CLARITY Act is intended to build on the GENIUS Act, which passed in July 2025 and established the first federal rules for payment stablecoins, including a 1:1 reserve requirement backed by high-quality liquid assets such as U.S. Treasuries. That legislation was deliberately narrow in scope. The CLARITY Act is the broader follow-on measure meant to cover tokenized assets, decentralized exchanges, and the general market structure that the GENIUS Act did not address.

The stablecoin yield question has proven to be the most intractable point of contention. Traditional banks have lobbied aggressively against provisions that would permit stablecoin issuers to pay yields, arguing that if retail customers can earn returns on dollar-pegged digital assets without the capital requirements and deposit insurance constraints that banks operate under, it could accelerate deposit outflows, particularly from smaller community banks.

Coinbase CEO Brian Armstrong has taken the opposite position publicly, arguing that blocking yield-bearing stablecoins would hobble their competitiveness in the payments market and that no bill would be preferable to a restrictive one. It is a split that has produced what Bessent, in unusually direct language for a Treasury Secretary, called a “nihilist group” within the crypto industry – implying that opponents of the bill who resist any regulatory framework should, as he reportedly put it, consider relocating to El Salvador.

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White House Economists Undercut the Banks

On April 8, the White House Council of Economic Advisers released a study that directly addressed the banking industry’s core objection. The analysis found that stablecoin yields pose only a quantitatively small risk to traditional bank deposits and that restrictions on stablecoin yields would do little to improve bank stability while reducing consumer options. That finding is significant because it removes the most substantive policy argument against yield-bearing stablecoins, leaving what remains largely a competitive lobbying dispute rather than a macroprudential concern.

Not Everyone Is Convinced

The push for speed has its own critics, and their objections go beyond the stablecoin yield dispute. The American Bankers Association has argued that passing a bill with unresolved yield loopholes could trigger meaningful deposit outflows from community banks, potentially destabilizing parts of the financial system that the legislation was never designed to touch. That concern was not fully resolved by the CEA study, which addressed systemic risk in aggregate terms but did not model the specific exposure of smaller regional institutions with thinner deposit bases.

The crypto industry’s own reservations are no less pointed. Coinbase previously withdrew its support from earlier versions of the bill on the grounds that yield restrictions – included to appease the banking lobby – would undermine the commercial viability of stablecoins in the payments market. Brian Armstrong’s position, that a bad bill is worse than no bill, is not a fringe view inside the industry; it reflects a calculation that locking in restrictive rules now would be harder to undo than waiting for a more favorable legislative moment.

Legal analysts have raised a separate concern: bills pushed through narrow political windows with limited floor debate tend to produce statutory language that is underspecified and more easily challenged in court, potentially leaving the regulatory framework Bessent wants in legal limbo for years. Some participants within the decentralized finance space have gone further, arguing that the urgency narrative is itself a political mechanism designed to pressure an industry with genuinely diverse interests into accepting federal oversight structures that may conflict with the architecture of the assets they are meant to regulate.

The Broader Strategic Play

The strategic dimension of Bessent’s op-ed extends beyond the bill itself. He has framed the November 2024 election outcome as a regulatory turning point – a shift away from what critics of the previous administration described as enforcement-led crypto policy toward a posture of active standard-setting. He has also argued that regulated stablecoins, particularly those backed by short-term U.S. Treasuries, could meaningfully increase demand for government debt instruments, providing a modest but real benefit to federal borrowing costs. On the question of a Bitcoin strategic reserve, Bessent has clarified that the U.S. intends to hold and stop selling the approximately $15-20 billion in digital assets already confiscated through law enforcement rather than making new purchases.

Whether that combination of economic incentives, competitive framing, and direct pressure from the Treasury Secretary moves the Senate before the midterm calendar closes off the realistic window remains to be seen. Polymarket traders, as of early April, are assigning a 63-72% probability that the CLARITY Act gets signed into law in 2026, which reflects genuine optimism but also real uncertainty about whether the stablecoin yield dispute can be resolved without either side walking away.

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