CLARITY Act Stalls in Senate as White House Steps In to Broker Crypto-Banking Compromise

The CLARITY Act continues to face significant delays in the Senate, prompting the White House to intervene and mediate growing tensions between traditional banking institutions and the cryptocurrency industry. At the center of these negotiations is White House crypto adviser Patrick Witt, who has been vocal in defending the bill's original pro-innovation framework.

Witt took to X to condemn efforts by banking groups to reshape the legislation into what he described as an anti-competitive measure, calling such attempts "shameful." His position aligns with President Donald Trump, who has warned that continued obstruction could drive the crypto industry toward rival nations, including China.

Coinbase executives are equally outspoken. Chief Legal Officer Paul Grewal, alongside CEO Brian Armstrong and Faryar Shirzad, accused banking lobbyists of attempting to gut the bipartisan GENIUS Act as a precondition for advancing the market structure bill. Grewal argued that banks are effectively trying to redirect financial benefits away from everyday consumers and toward large financial institutions. He also pushed back on concerns raised by JPMorgan Chase CEO Jamie Dimon, dismissing deposit flight risk fears as unsupported by evidence.

The opposition from banking groups runs deeper than rhetoric. The Bank Policy Institute, representing Wall Street heavyweights like JPMorgan Chase, Goldman Sachs, and Citigroup, is reportedly weighing a lawsuit against the U.S. Office of the Comptroller of the Currency over its efforts to extend banking charters to crypto firms.

Despite the gridlock, Democratic Senator Angela Alsobrooks suggested that banks may need to accept compromise, as the Senate Banking Committee targets a markup by the end of March. Prediction markets reflect growing uncertainty, with Kalshi placing the odds of the CLARITY Act becoming law before June at just 41%, though passage before 2027 sits at 68%. Solana Policy Institute President Kristin Smith remains cautiously optimistic, forecasting final passage by July.