The final piece of legislation needed to meld the crypto world with mainstream finance is at risk of getting derailed.
At the center of the D.C. turmoil is a standoff that pits major crypto exchange Coinbase Global (COIN) against the US banking industry. To settle the matter, the White House has stepped in to mediate the fight.
On Monday, crypto czar David Sacks will host banking and crypto trade groups, along with Coinbase, for what could evolve into multiple rounds of policy negotiations, according to people familiar with the matter.
The need for the White House to step in comes after months of building tension over whether crypto platforms should be able to pay customers “yield,” or interest on their stablecoin balances.
“This is about creating a foundational regulatory framework for crypto in the United States,” said Cody Carbone, CEO of crypto advocacy group The Digital Chamber, which will be attending the Monday meeting. But attention on “stablecoin rewards have now taken over this entire bill,” Carbone added.
The forthcoming bill, which is called the Clarity Act, aims to lay out firm rules for which federal agency oversees what portions of the crypto markets. This includes a range of crypto assets, decentralized finance products, and tokens representing real-world assets like stocks and bonds.
Setting those rules would give the crypto world permanent legitimacy in the eyes of mainstream finance. It would also cement the ability for banks to delve deeper into crypto.
Last Thursday, the Senate Agriculture committee passed a portion of the bill by a party-line vote of 12 to 11. Such a narrow win bodes poorly for further progress, according to TD Cowen policy analyst Jaret Seiberg. Without more support from Democrat lawmakers, “this is not a sustainable strategy,” Seiberg wrote to clients. By his estimates, the bill needs 10 Democrats voting in support.
Coinbase CEO Brian Armstrong speaks onstage during the 2025 New York Times Dealbook Summit at Jazz at Lincoln Center on Dec. 3, 2025, in New York City. (Michael M. Santiago/Getty Images) ·Michael M. Santiago via Getty Images
After lawmakers met with major bank CEOs in December, the Senate Banking Committee pushed back its date for a markup hearing of the bill to January. The Congressional Committee has since postponed the hearing twice, with the latest decision coming hours after Coinbase CEO Brian Armstrong rejected the bill’s most recent draft due to some key compromises.
Days later, when Armstrong reached the World Economic Forum in Davos, Switzerland, he posted a video on X sharing some of his goals for the conference. These included continuing work on the market structure legislation and plans to “meet with some of the bank CEOs to figure out how to make this a win-win.”
Armstrong did encounter a number of big bank CEOs through in-person meetings and unplanned run-ins, according to people familiar with those matters.
Bank of America’s (BAC) CEO Brian Moynihan, for instance, sat down for a discussion with Armstrong in a lounge, while JPMorgan Chase (JPM) CEO Jamie Dimon encountered Armstrong on a few occasions at the confab, including during a reception held by the president.
During one encounter, Dimon told Armstrong, “You are full of s—,” and accused the Coinbase CEO of giving a misleading argument about the issue during TV appearances, according to a Wall Street Journal report.
JPMorgan Chase chairman and CEO Jamie Dimon gestures as he speaks during the World Economic Forum (WEF) annual meeting in Davos on Jan. 21, 2026. (Fabrice COFFRINI / AFP via Getty Images) ·FABRICE COFFRINI via Getty Images
The discussion between Armstrong and Moynihan was somewhat more cordial, according to people familiar with the exchange, which the Wall Street Journal first reported.
Moynihan told Armstrong there were parts of the banking industry concerned about how Coinbase’s business model resembled bank deposit services without agreeing to the same regulatory oversight. The CEO of the nation’s second-largest bank suggested Armstrong consider registering for an SEC-regulated money market fund, a sentiment that other bank CEOs have shared with Yahoo Finance.
While opinions vary widely on how much stablecoins could hurt US lender margins, British bank Standard Chartered recently estimated US banks could lose some $500 billion in bank deposits over the next two years from the dollar-pegged instruments.
With the midterm election season coming, a key risk for the Clarity Act is that Congress’s ability to pass the legislation is expected to dwindle throughout the year. And, as attention ebbs, the worry is that a newly elected Congress may not be so friendly to the world of digital assets.
After spending over $135 million during the 2024 election, crypto political action committee Fairshake announced last week that with its latest contributions, including $25 million from Coinbase, the organization has raised $193 million in cash for future elections.
As Armstrong worked the circuit in Davos, his rebuff of amendments made to the Clarity Act back in D.C. fell somewhat out of step with other key industry players, including venture capital firm Andreessen Horowitz and Ripple CEO Brad Garlinghouse.
“You might not love every part of the CLARITY Act, but I can guarantee you’ll hate a future Dem version even more,” Patrick Witt, executive director for the White House’s crypto council, wrote in a Jan. 21 post on X.
“No piece of legislation has ever been perfect by everyone’s standards,” Garlinghouse wrote in response to Witt’s comments. “I’ll keep saying it (even if others disagree) — clarity over chaos.”
David Hollerith covers the financial sector, ranging from the country’s biggest banks to regional lenders, private equity firms, and the cryptocurrency space.
