Wall Street Banks Duking It Out With Crypto Bros Over Key Bill

The banking industry has clashed with the crypto industry over a cryptocurrency bill largely backed by congressional Republicans and President Donald Trump.

The banking industry pushed back aggressively against the Digital Asset Market Clarity (CLARITY) Act, which would establish a regulatory framework for cryptocurrency and digital assets, that is heavily lobbied and supported by the crypto industry. Some Republican senators argued they will oppose the bill without adding protections for state and local banks, which argued they could be wiped off the map if lawmakers did not add these protections

Banks expressed concerns about whether crypto firms should be allowed to offer rewards programs that pay yield to customers who hold stablecoins, a form of cryptocurrency designed to maintain a value of $1. The industry is worried that crypto rewards programs could lead customers to pull billions of dollars out of checking and savings accounts, which would threaten their 💼Business model.

Entities linked to the crypto industry spent at least $14.6 million in 2025 retaining lobbyists to work on the Clarity Act and other pieces of legislation, according to the Washington Examiner. Members of Congress who were among the initial co-sponsors of the bill had alums of their offices lobbying lawmakers on crypto-related issues when they signed onto the bill. These included former staffers for House Majority Whip Tom Emmer and Republican Pennsylvania Rep. Glenn Thompson.

Digital Chamber, Coinbase and the Blockchain Association, Stand with Crypto, Kraken and Andreessen Horowitz have lobbied for the legislation. Coinbase CEO Brian Armstrong said the legislation is a “win” for the “future of America as a global leader for finance, innovation, and national security.”

“The Senate has had CLARITY for a year,” Armstrong said. “Since then, lawmakers have negotiated hundreds of pages of changes, reached agreement on SEC and CFTC nominations, and secured unprecedented ethics commitments. The crypto and banking industry have compromised as well.
That’s how legislation is supposed to work. No one gets everything. Everyone gets most of what they need. At this point, the only thing left isn’t negotiation—it’s whether some group will try to stall or block legislation that already has broad bipartisan support.”

“Millions of Americans own crypto and are watching. It’s time to call the vote,” Armstrong continued.

Coinbase lobbying hit $1.07 million in the first quarter of 2026, which included provisions of the Clarity Act.

The Blockchain Association and the Crypto Council for Innovation wrote a joint letter to the Committee on Banking, Housing and Urban Affairs in May, arguing the bill would “establish clear oversight, protect consumers, and give responsible innovators the certainty they need to build, hire, and scale in the United States.”

Several banking organizations, including JP Morgan, the American Banking Association and the Community Bankers Association, have lobbied against the bill. JP Morgan CEO Jamie Dimon opposed the bill, arguing against its treatment of stablecoin yields and its lack of legal protections.

“It allows cryptocurrency firms to effectively pay interest on deposits — stablecoins or something like that — without the protection that they should have,” Dimon said. “It has almost no legal protections,” Dimon said on “Fox 💼Business” in May.

Kara Calvert, vice president of U.S. policy at Coinbase, the largest U.S. crypto coin exchange, accused banks of “promoting fear” about the legislation to outlaw competition.

“But deposit flight is a farce, and banks are promoting fear, not facts,” Calvert said. “Lawmakers have a duty to protect consumers who are best served by competitive innovation, not incumbents.”

Alice P. Frazier, the CEO of Potomac Bank in Charles Town, told the DCNF the legislation could hurt local banks and communities.

“As a community banker, I see every day how local deposits are put to work in the communities we serve—financing homes, small businesses, farms, and Main Street growth,” Frazier said. “That is why community bankers are deeply concerned that the Clarity Act, as currently drafted, could create incentives for deposits to leave regulated community banks and flow to crypto firms that cannot replicate the same local lending relationships or community presence.”

Frazier called on Congress to address “loopholes around interest and yield on payment stablecoins” before the bill advanced.

Some Republican senators, including Sens. Josh Hawley of Missouri and John Curtis of Utah, were hesitant to support the legislation due to the bank industry’s concerns.

“I want to support crypto, I like crypto. I also like my banks,” Curtis said, according to Politico. “And they really need to come to a place where it’s either or.”

Hawley vowed he would vote with his constituents who were “very worried” about the bill’s effect on community banks.

“I’m going to vote with my state on this,” Hawley said. “I can tell you that my state right now — agriculture folks, local community people — are very, very worried about the effect on community banks. They are blowing me up over it.”

Republican Ohio Sen. Bernie Moreno, a primary co-sponsor, received money from the crypto industry  through the super PAC Fairshake and its affiliates, Defend American Jobs and Protect Progress, according to the Washington Examiner. He received $40 million in support from Defend American Jobs during his 2024 run against former Democratic Ohio Sen. Sherrod Brown. Protect Progress spent more than $10 million supporting Democratic Arizona Sen. Ruben Gallego, who also sits on the Banking Committee.

Republican Wyoming Sen. Cynthia Lummis, a lead sponsor of the Clarity Act, disputed banks’ claims that crypto caused deposit flights.

“Some community banks are suggesting stablecoins are driving deposit flight. The data says otherwise: BofA shows household deposits rising across income groups this year, and the FDIC reports domestic deposits grew for a seventh straight quarter. Community banks actually outperformed the industry, posting 5% deposit growth,” Lummis said.

“If the worry is the Clarity Act compromise itself, that’s backwards,” Lummis continued. “Section 404 bars stablecoin issuers from paying anything that functions like interest, even disguised as rewards or points, and bans marketing stablecoins as deposits or FDIC-insured. It’s actually tougher than current law, not looser.”

The American Bankers’ Association, Bank Policy Institute, the Financial Services Forum, the Consumer Bankers Association and National Bankers’ Association said they were “encouraged” by the conversations they had with senators regarding their concerns about the bill.

“We are encouraged by the constructive conversations we are having with senators who share our concerns,” a joint statement from July 22 said.

“We appreciate their willingness to consider targeted changes that would strengthen the prohibition on interest-like payments for holding stablecoins, which will siphon away the bank deposits that fuel small 💼Business, mortgage and farm loans in communities across the country. Our good faith efforts to strengthen the Clarity Act will continue.”

The American Bankers’ Association Chairman Kenneth Kelly said he was “optimistic” an improved bill could emerge after the August recess, according to Politico.

The Senate left for August recess without passing the Clarity Act. The crypto industry and members of Congress looked to August as a key deadline to passing the legislation. Senate Majority Leader John Thune announced the legislation would reach the floor in September.

Democrats want an ethics provision included in the bill to crack down on Trump’s ability to profit off of his family’s crypto businesses. Republicans will need support from their Democratic colleagues to advance the legislation.

Democratic Massachusetts Sen. Elizabeth Warren said the bill had not addressed the issue of corruption, consumer protection or national security.

Crypto has been associated with several criminal enterprises and organized crime networks. Illicit crypto-linked money laundering surpassed $82 billion globally throughout 2025. Chinese-speaking and Southeast Asian organized crime networks have utilized digital assets to move billions daily from scam compounds and drug trafficking operations.

Crypto scammers have posed as the Internal Revenue Service (IRS), law enforcement and tech support and told panicked victims to deposit cash into Bitcoin ATMs to fix a false problem, according to the Federal Bureau of Investigation (FBI).

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