Trump advisor warns banks: opposing CLARITY Act risks ‘catastrophic’ losses as stablecoins buy US T‑bills
Patrick Witt, a crypto adviser to former President Trump, criticized US banks for their hardline opposition to the CLARITY Act, saying an uncompromising stance could be “catastrophic” for banks and likened it to an arsonist threatening their own home. Banks argue that allowing stablecoins and intermediaries to offer rewards above 5% will trigger deposit flight and harm local lending. Witt countered that even if banks block the CLARITY Act, stablecoin issuers can still pay rewards through intermediaries—permitted under the existing GENIUS Act—so banks stand to lose customers regardless. The dispute escalated after comments from Christopher Williston, president of the Independent Bankers Association of Texas, and public criticism from Donald Trump and Eric Trump toward big banks. The White House frames stablecoins as a low-cost way to help service US Treasury debt: research cited in the article shows stablecoins were the third-largest buyer of US T‑bills in 2025, holding about $153 billion and sometimes pushing T‑bill yields down by more than 3.5 basis points. Market odds still price a ~71% chance the CLARITY Act will pass this year. For traders: the clash highlights regulatory uncertainty around stablecoin yields and potential shifts in deposit flows and capital allocation, which could affect on‑chain stablecoin supply, T‑bill demand, and short-term market liquidity.
Neutral
The news increases regulatory uncertainty but does not immediately change market fundamentals. Short-term, traders may see volatility in stablecoin‑pegged assets and money‑market dynamics as participants price the odds of regulatory outcomes and potential deposit shifts. The article notes stablecoins hold $153 billion in US T‑bills and that markets still price ~71% chance of the CLARITY Act passing this year — factors that temper panic. If banks block CLARITY, stablecoin yields can continue via intermediaries (per GENIUS Act), which could sustain on‑chain activity and T‑bill demand; conversely, prolonged political fights or restrictive measures could reduce stablecoin growth and liquidity. Historically, regulatory disputes (e.g., stablecoin guidance, US executive comments) have produced short-lived spikes in volatility but limited long-term price direction unless legislation materially alters issuance or on‑ramps. Therefore the likely impact is neutral overall: heightened short-term volatility and trading opportunities, with long‑term effects dependent on legislative outcomes and whether banks implement countermeasures that materially shift deposits or credit flows.