Banking Sector’s Opposition to Crypto Legislation

President Donald Trump recently highlighted the threats posed by banks to the GENIUS Act in a Truth Social post. According to Trump, banks are undermining the benefits that stablecoin issuers stand to gain from this legislation. This conflict arises amidst ongoing debates over stablecoin yields and their potential impact on the traditional banking sector.

Trump expressed urgency, stating, “The U.S. needs to get Market Structure done, ASAP. Americans should earn more money on their money.” His comments reflect a broader industry sentiment that the current banking profits should not come at the expense of technological progress in the crypto space.

The CLARITY Act and Its Congressional Journey

The CLARITY Act, or the Digital Asset Market Clarity Act of 2025, is another significant legislative effort currently under consideration. This act aims to provide clear roles for the Securities and Exchange Commission and the Commodity Futures Trading Commission in regulating the crypto industry. The act passed the House with bipartisan support last year but is now facing different versions in the Senate.

The banking sector has taken issue with the GENIUS Act’s provisions on stablecoin rewards, arguing that these could draw deposits away from traditional banks. Some lobbyists are advocating for closing loopholes that they believe could destabilize the banking system.

Calls for Resolution and Legislative Action

Despite the friction, there have been efforts to push forward with market structure legislation. The White House has facilitated meetings between banking and crypto representatives, although a resolution remains elusive. Notably, JPMorgan Chase CEO Jamie Dimon has called for stablecoin yields to adhere to bank-style regulations, advocating for a “level playing field.”

Legislators like Rep. French Hill and Senator Cynthia Lummis have echoed Trump’s sentiments, urging Congress to expedite the passage of the Clarity Act. “America can’t afford to wait,” Lummis stated, emphasizing the need for prompt legislative action.

The ongoing debates highlight the complex interplay between innovation and regulation in the crypto sphere. As the industry awaits a definitive path forward, the stakes remain high for both traditional banks and the emerging digital finance sector.

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Senate Divisions Over Stablecoin Regulations

The path to comprehensive crypto reform is not without obstacles. Reports indicate that Senators are divided over stablecoin regulations. The Senate Agriculture Committee has advanced part of the proposed market-structure plan, yet the Senate Banking Committee has stalled its efforts due to disagreements over potential limits on stablecoin yields. This division has led to a withdrawal of support from key industry players, reshaping the legislative landscape.

Need for Swift Legislation

Some lawmakers are pushing for the Clarity Act to be prepared for a presidential signature by spring. Proponents argue that timely legislation is crucial to prevent rules that might inadvertently harm legitimate services. Discussions among both Republican and Democratic senators reflect a concerted effort to find common ground, with suggestions of using President Trump’s approval as a milestone for progress.

White House Mediation Efforts

The White House has been actively involved in mediating discussions between banking and crypto executives. These meetings, although ending without a concrete agreement, underscore the importance of finding a consensus on stablecoin interest and reward program restrictions. White House advisers, including Patrick Witt, have been pivotal in these negotiations.

Market reactions to these developments have been mixed. Bitcoin and other digital assets have experienced renewed volatility. While some traders see the potential for a clear U.S. framework as a stabilizing factor, others worry that specific regulations might impact the revenue streams of exchanges and lenders.

Implications for Industry Stakeholders

The ongoing debate highlights contrasting interests within the industry. Banks generally favor stringent limits on stablecoin yields to prevent an exodus of deposits to crypto platforms. In contrast, exchanges argue that such rewards foster user engagement and competition, which are critical for innovation.

Ultimately, lawmakers face the challenge of balancing consumer protection, systemic risk, and commercial freedom. The finalized legislation could diverge significantly from the current proposals.

The post Crypto Reform 2023: Urgent Action Needed for Market Stability appeared first on Crypto Market Insights: Dive In with CryptoUpdate.io.

During the House Appropriations Committee meeting, which supervises the funding of federal agencies, Rep. Glenn Ivey, a Democrat from Maryland, highlighted certain events preceding Trump’s January inauguration. He noted that Tron, a company owned by Sun, had purchased $30 million in tokens from World Liberty Financial—a DeFi company supposedly inspired by the former president.

Subsequently, the SEC decided to suspend its fraud lawsuit against Sun and his businesses, including Tron, effectively putting it on hold. Alongside this, a memecoin associated with Trump has been in circulation, and a special gala for the top 220 memecoin holders is planned for later this week. Sun declared his participation as one of these holders in a post on X early Tuesday. “Delighted to back @POTUS and thankful for the invitation from @GetTrumpMemes to attend President Trump’s Gala Dinner as his TOP fan!” Sun posted.

Ivey expressed concern over these events, stating, “This, in my opinion, reeks of impropriety. I would hope that the SEC is looking into this matter.” Atkins referred to Sun’s case as an “active case” and emphasized that the SEC does not classify memecoins as securities.

Atkins, appointed by Trump, has announced a “new day” for the SEC after the previous chair, Gary Gensler, adopted a less welcoming attitude towards the crypto industry. Gensler’s tenure saw a cautious approach to crypto and multiple charges against industry leaders. Many of these cases were later dismissed. Atkins declared in his prepared testimony that his approach to crypto regulation would be through notice and comment rulemaking rather than regulation through enforcement.

During the hearing, Rep. Chuck Edwards, a Republican from North Carolina, asked Atkins about the funding requirements of the SEC’s new crypto task force. Led by Commissioner Hester Peirce, the task force was established earlier this year by former acting chair Mark Uyeda with a mission to conduct industry roundtables and clarify application of securities laws to crypto. “I’m not entirely sure,” Atkins replied, “It’s staffed by current employees and Commissioner Peirce is leading it, so it doesn’t require any additional funding.”

Disclaimer: The Block is an independent news outlet that provides news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block operates independently and aims to deliver objective, timely, and impactful information about the crypto industry. This article is not meant as legal, tax, investment, financial, or other advice.

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Sarah Milby, the trade group’s policy chief, will assume the role of interim CEO until Mersinger officially takes the helm on June 2. Kristin Smith, the current CEO of the Blockchain Association, is stepping down this Friday to move to the Solana Policy Institute.

Both the CFTC and Mersinger’s office have yet to comment on the matter. The Blockchain Association, however, confirmed that Mersinger’s tenure at the CFTC will end on May 30.

Former President Joe Biden appointed Mersinger, a Republican, as a commissioner in 2022. She was among the potential candidates to lead the CFTC until former President Donald Trump chose ex-official and crypto executive Brian Quintenz as chairman. Trump, during his campaign, pledged to support the crypto industry and facilitate the adoption of digital assets.

In his first week in office, Trump established a cryptocurrency working group to suggest digital asset regulations. In March, he signed an executive order to create a federal bitcoin reserve. Now, the crypto industry is lobbying Congress to pass new regulatory rules for cryptocurrencies.

Last week, an effort to establish a regulatory framework for stablecoins, a crypto type linked to the U.S. dollar, fell through in the U.S. Senate. This setback has added new urgency to the industry’s push for legislative change.

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Originally proposed in July 2024, the bill failed to gain traction due to a lack of bipartisan support and doubt about its practicality. As a result, it was effectively “shelved” at the conclusion of the 2023-2024 congressional session.

To keep the Bitcoin Act alive, Lummis must reintroduce it during the current Congress. Any bill not passed in a congressional session needs to be reintroduced in the subsequent session to remain under consideration.

Last week, President Donald Trump signed an executive order to establish a Strategic Bitcoin Reserve. This action aligns with some of the Bitcoin Act’s objectives but does not mandate new Bitcoin purchases by the government. Instead, it sets the guidelines for managing confiscated assets.

David Bailey, the CEO of Bitcoin Inc, believes Trump’s executive order is only the initial move. The following step is to advocate for congressional legislation that would cement the establishment of a strategic Bitcoin reserve.

According to Bailey, “People are overlooking that the SBR isn’t just an executive action or legislative initiative… we need both. The executive action paves the political path and signals to Congress that this is a priority.”

“The Bitcoin Act’s time has come,” he concluded.

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