White House Summons Crypto, Bank CEOs as $500B ‘Deposit Flight’ Stalls Bill

The Summit

The White House has intervened in the legislative deadlock paralyzing the CLARITY Act. On February 2, the administration’s AI and Crypto Czar, David Sacks, and Digital Asset Council Director Patrick Witt will host executives from Coinbase, JPMorgan, and Bank of America in a closed-door summit. The directive is explicit: resolve the dispute over stablecoin yields or risk killing the bill entirely.

This intervention follows a collapse in negotiations last week when Coinbase withdrew support for the Senate Banking Committee’s draft. The administration views the CLARITY Act as a critical deliverable before the midterm election cycle intensifies, but the impasse has left the bill in limbo.

The Receipt: $500 Billion at Risk

The conflict centers on a single vector: yield. Banks contend that allowing stablecoin issuers to pass interest to users creates an unfair arbitrage against regulated deposits. A new analysis by Standard Chartered quantifies this fear, projecting that widespread adoption of yield-bearing stablecoins could drain $500 billion from U.S. commercial bank deposits by 2028.

The banking lobby argues this constitutes “mass deposit flight,” threatening the lending capacity of regional banks. Crypto proponents, led by Coinbase CEO Brian Armstrong, counter that the restriction, specifically Section 404 of the proposed CLARITY Act, is a protectionist moat designed to insulate banks from technological competition.

“The bank lobbying groups are out there trying to ban their competition. I have zero tolerance for that.” Brian Armstrong, Coinbase CEO

Institutional Context

The dispute is a direct hangover from the GENIUS Act, passed in July 2025. While that legislation legalized stablecoin issuance, it left the “yield loophole” open. Banks warn that without the CLARITY Act closing this gap, they face an existential threat from non-bank issuers offering 4-5% APY on what are effectively checking accounts.

For the White House, the stakes are political. Failure to pass the CLARITY Act would leave the administration with a fragmented digital asset policy heading into 2027. Patrick Witt, the administration’s point man on the issue, issued a blunt ultimatum to industry holdouts on X:

“You might not love every part of the CLARITY Act, but I can guarantee you’ll hate a future Dem version even more.”