Wall Street banks and crypto leaders to meet in Washington with landmark Clarity Act hanging in the balance

The latest legislation needed to merge the crypto world with mainstream finance is at risk of being derailed.

At the center of the DC turmoil is a showdown pitting major crypto exchange Coinbase Global (COIN) against the American banking sector. To resolve the matter, the White House has stepped in to mediate the fight.

On Monday, crypto czar David Sacks will host banking and crypto trading groups, along with Coinbase, for what could evolve into several rounds of political negotiations, according to people familiar with the matter.

The need for the White House to intervene comes after months of tension over whether crypto platforms should be allowed to pay customers “yield” or interest on their stablecoin balances.

“This is about creating a fundamental regulatory framework for crypto in the United States,” said Cody Carbone, CEO of crypto advocacy group The Digital Chamber, who will attend Monday’s meeting. But the focus on “stablecoin rewards has now taken over that whole bill,” Carbone added.

Read more: How stablecoins work

The upcoming bill, which is called the Clarity Act, aims to set firm rules for which federal agency oversees which parts of crypto markets. This includes a range of crypto-assets, decentralized financial products and tokens that represent real-world assets such as stocks and bonds.

Establishing these rules would give the crypto world permanent legitimacy in the eyes of mainstream finance. It would also consolidate banks’ ability to delve into cryptography.

Last Thursday, the Senate Agriculture Committee approved part of the bill on a 12-11 party-line vote. Such a narrow victory does not bode well for further progress, according to TD Cowen policy analyst Jaret Seiberg. Without more support from Democratic lawmakers, “this is not a sustainable strategy,” Seiberg wrote to clients. According to his estimates, the bill needs 10 Democrats voting in support.

NEW YORK, NEW YORK - DECEMBER 3: Coinbase CEO Brian Armstrong speaks on stage during the New York Times Dealbook 2025 Summit at Jazz at Lincoln Center on December 3, 2025 in New York City. NYT columnist Sorkin hosted the annual Dealbook Summit, which brings together business and government leaders to discuss the biggest stories in business, politics and culture. (Photo by Michael M. Santiago/Getty Images) — Coinbase CEO Brian Armstrong speaks on stage during the 2025 New York Times Dealbook Summit at Jazz at Lincoln Center on December 3, 2025 in New York City. (Michael M. Santiago/Getty Images) · Michael M. Santiago via Getty Images

After lawmakers met with top bank CEOs in December, the Senate Banking Committee pushed back the date for a markup hearing on the bill in January. The Congressional Committee has since postponed the hearing twice, and the latest decision comes hours after Coinbase CEO Brian Armstrong rejected the most recent draft of the bill due to some key compromises.

“There are too many problems,” Armstrong wrote in a post on X on Jan. 14citing amendments that would “kill stablecoin rewards” along with other issues.

Days later, when Armstrong arrived at the World Economic Forum in Davos, Switzerland, posted a video on X sharing some of their goals for the conference. These included continued work on market structure legislation and plans to “meet with some of the bank’s chief executives to find out how to make this a win-win”.

Armstrong met with several CEOs of major banks through face-to-face meetings and unplanned confrontations, according to people familiar with the matters.

Bank of America’s (BAC) CEO Brian Moynihan, for example, sat down for a discussion with Armstrong in a lounge, while JPMorgan Chase (JPM) CEO Jamie Dimon met with Armstrong on a few occasions at the confab, including during a reception hosted by the president.

During an encounter, Dimon told Armstrong, “You’re full of…” and accused the Coinbase CEO of making a misleading argument about the issue during television appearances. according to a Wall Street Journal report.

JPMorgan Chase Chairman and CEO Jamie Dimon gestures as he speaks during the annual meeting of the World Economic Forum (WEF) in Davos on January 21, 2026. The World Economic Forum takes place in Davos from January 19 to 23, 2026. (Photo by Fabrice COFFRINI / AFP via Getty Images) — JPMorgan Chase Chairman and CEO Jamie Dimon gestures as he speaks during the annual meeting of the World Economic Forum (WEF) in Davos on January 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 was first reported by the Wall Street Journal.

Moynihan told Armstrong that there were parts of the banking industry concerned about how Coinbase’s business model resembled bank deposit services without accepting the same regulatory oversight. The CEO of the nation’s second-largest bank suggested Armstrong consider signing up for an SEC-regulated money market fund, a sentiment other bank CEOs have shared with Yahoo Finance.

While opinions vary widely on how much stable currencies could hurt U.S. lenders’ margins, British bank Standard Chartered recently estimated that U.S. banks could lose about $500 billion in bank deposits over the next two years on dollar-pegged instruments.

The obstacle of this bill is not only a concern for the crypto industry, but its postponement also threatens to stain a key. campaign promise made by President Trump as part of his broader promise to make the US the “crypto capital of the planet.”

After enduring fierce scrutiny during the Biden era, a torrent of political spending and Donald Trump’s eventual adoption of digital assets led the the crypto industry to get almost everything they wanted from DC., which culminates with the the passage of the GENIUS Act last summer.

With the midterm election season upon us, a key risk to the Clarity Act is that Congress’s ability to pass legislation is expected to wane over the course of the year. And as attention wanes, the concern is that a newly elected Congress may not be so friendly to the world of digital assets.

After spending more than $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.

While Armstrong was working the Davos circuit, his rejection of amendments to the Clarity Act in DC fell somewhat out of step with other key industry players, including venture capital firm Andreessen Horowitz and Ripple CEO Brad Garlinghouse.

“You may not like every part of the CLARITY Act, but I can guarantee that you will hate a future Dem version even more,” Patrick Witt, executive director of the White House crypto council. wrote in a Jan. 21 post on X.

“No law 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.”

For the banking sector, this dust also occurs in the middle of a increasingly strained relationship with the Trump administration. While regulators are making supervisory and capital reforms to benefit banks, the president has also called on one year limit on credit card interest rates at 10%all while Dimon, the country’s most prominent bank executive, he navigates his own ups and downs with Trump.

David Hollerith covers the financial sector, ranging from the nation’s largest banks to regional lenders, private equity firms and the cryptocurrency space.

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