White House officials convened a high-stakes summit on Monday with cryptocurrency executives and banking associations, attempting to break a legislative deadlock that threatens to stall the integration of digital assets into the American financial system. The sticking point in the aptly named Clarity Act is money - specifically, whether crypto platforms should be permitted to offer customers yield on stablecoins, a practice traditional lenders fear could trigger a massive flight of capital from their balance sheets.
But the administration views the dispute through a different lens.
President Trump threw his weight behind the bill from the Oval Office, framing the regulatory stalemate not as a banking issue, but as a geopolitical urgency. With Beijing aggressively rolling out its central bank digital currency, the administration argues that American hesitation creates a vacuum that the yuan is poised to fill.
"If we don't do crypto... China's going to do it," Trump said.
The President's intervention signals a shift in Washington’s calculus, where digital asset infrastructure is increasingly treated as a pillar of national soft power.
Protecting Incumbency
The banking lobby remains unconvinced. Their representatives at the summit reportedly argued that allowing crypto exchanges to pay rewards on dollar-backed tokens creates an uneven playing field. If a tech platform can offer higher yield without the overhead of a traditional branch network, banks warn that billions in deposits could migrate out of the insured banking system overnight.
Coinbase Chief Legal Officer Paul Grewal dismissed these concerns as a smokescreen. Speaking to Fox Business following the meeting, Grewal suggested the financial establishment is less worried about safety than it is about losing its grip on the payment rails.
"What the bank lobbyists have done in confusing the American people... is about preserving their incumbency and limiting competition," Grewal said.
He argued that the banking sector is sitting on over $3 trillion in reserves at the Federal Reserve that is largely stagnant, while stablecoins actively drive demand for government debt. Because major stablecoin issuers back their tokens dollar-for-dollar with short-term U.S. Treasuries, Grewal contends they are essentially propping up the U.S. borrowing system.
The dollar needs demand.
"What stablecoins... do is drive demand for U.S. dollars in ways that keep U.S. debt in check and keep borrowing costs low," Grewal said.
The Everything Exchange
The legislative fight comes as the distinction between crypto exchanges and traditional brokerages blurs. Coinbase is actively expanding beyond simple token trading, moving into stock trading, derivatives, and prediction markets.
This expansion aims to position the company as a primary financial hub rather than a niche speculative venue. The move into prediction markets is particularly notable, allowing retail traders to hedge against real-world events in a way previously reserved for sophisticated institutional desks.
But this ambition relies on a regulatory framework that currently does not exist.
For an industry often accused of dodging rules, the crypto sector is now in the peculiar position of begging for them. While the previously passed "Genius Act" established some baselines for stablecoin operations, the Clarity Act is designed to provide the federal oversight required to compete globally.
The administration’s fear is that while American industries bicker over interest rates and deposit insurance, the architecture of the future global economy is being written in Shanghai.
China has made its intent clear.
"It would be a disaster for America if that were to happen," Grewal said, referring to the potential displacement of the dollar by a Chinese digital currency. "It is critical that we pass sensible rules... that will support new growth."