Trump Family Takes on Banks in Crypto Yield War-Who Will Win?

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Trump Family Rallies Against Banks as Stablecoin Yield Battle Stalls Congress

Eric Trump recently claimed on X (formerly Twitter) that American banks are aggressively going after cryptocurrencies and stablecoins. This accusation is part of a larger, ongoing debate in Washington. His post, promoting his family’s cryptocurrency business, World Liberty Financial, followed a similar statement from his father, President Donald Trump, who warned on Truth Social that banks were blocking the CLARITY Act – a major bill aimed at regulating the crypto market.

Eric Trump on X

The Trump family’s unified public statements point to a rare situation: a U.S. president and their family actively opposing the established financial industry to support a new industry in which they have a personal financial interest. This also shows how frustrated the White House has become with the lack of progress on legislation that the cryptocurrency industry sees as crucial for its future.

The main issue in this disagreement is a seemingly complex question with huge financial implications: should cryptocurrency exchanges and platforms be permitted to pay customers interest on stablecoins they hold?

A Fight Over the Future of the Digital Dollar

Stablecoins are digital currencies designed to maintain a stable value, usually equal to the US dollar. They’re backed by safe assets like cash and short-term government bonds. These tokens have become essential for the cryptocurrency world, allowing for easy international money transfers, trade settlements, and are even being used as a way to save money. Currently, around $309 billion worth of stablecoins are in circulation, and experts predict this could reach $420 billion by the end of the year. This growth could create a potential reward pool of $6 to $10 billion each year.

That pool is what the banks want to shut down.

The current issue stems from a law called the GENIUS Act, signed by President Trump in July 2025. This law established federal rules for payment stablecoins, specifically prohibiting stablecoin companies from directly paying interest to customers. However, it didn’t prevent crypto exchanges like Coinbase from offering rewards on stablecoins held on their platforms. Banks are concerned this loophole could draw customers away from traditional savings accounts, as these reward-based stablecoins offer a competing way to earn interest.

As a researcher following the CLARITY Act’s progress, I observed a clear push from banks to address what they saw as a regulatory loophole concerning stablecoins. During February, they participated in two meetings arranged by the White House, presenting a proposal that would effectively ban any returns earned on stablecoins. However, the crypto industry viewed this not as consumer protection, but as a deliberate attempt to stifle competition.

Senate in Gridlock

The Senate Banking Committee has been stalled since January after Coinbase pulled its backing for a proposed bill. Coinbase CEO Brian Armstrong explained the company prefers no legislation at all to one that includes what they see as harmful restrictions on rewards for stablecoins.

The President has stepped in directly, clearly frustrated with the ongoing stalemate that has blocked progress in the Senate Banking Committee for almost two months. Although the bill, known as the CLARITY Act, passed the House in July, it’s been stalled by conflicting viewpoints. Senators proposed 137 changes before the initial January 15th deadline, covering issues from ethical concerns regarding officials from the Trump administration to broader powers to monitor decentralized financial platforms.

The Senate Agriculture Committee approved its version of the bill back in January, but it still needs to be combined with the House version and pass through both committees before the entire Senate can vote on it. There’s currently no set date for when that will happen.

Banks vs. Crypto: An Asymmetric Battle

Banks argue their concerns about stablecoins are about protecting the financial system. The American Bankers Association claims that unchecked returns on stablecoins could put up to $6.6 trillion in bank deposits at risk. They believe people would move money from traditional, federally insured bank accounts to these crypto accounts, which could reduce bank lending in local communities and harm the overall economy.

The cryptocurrency industry strongly disagrees with that idea. Patrick Witt, an advisor to the White House and former Executive Director of Trump’s crypto advisory council, attempted to shift the focus to a technical point: stablecoins differ from bank deposits because the companies that issue them don’t lend out or reuse the funds backing those coins. He argued that the main concern isn’t simply about earning interest.

Industry leaders are cautioning that strict US regulations could drive business overseas. Jakob Kronbichler, CEO of Clearpool, explained to reporters that limiting legitimate onchain financial activity within the US could force it to move to other countries or become dominated by a few large companies. Ron Tarter, CEO of MNEE, a stablecoin issuer, agreed, stating that moving stablecoin-related activity offshore would harm US innovation and make it harder to monitor these markets.

Former President Trump emphasized the importance of crypto legislation, arguing that without it, the U.S. could lose its leadership in the field to countries like China. Other regions are already moving forward with regulations – the European Union’s MiCA framework is in place, Hong Kong has rules for stablecoins, and Vietnam will have digital asset laws starting in January 2026.

Prediction Markets Stay Cautiously Optimistic

Despite the current political stalemate, my research suggests the market isn’t anticipating a complete failure of the CLARITY Act. Looking at prediction markets, bettors currently give it around a 74% chance of being signed into law by 2026, according to Polymarket. Kalshi bettors are similarly optimistic, with 70% predicting passage before 2027. Industry figures like Ripple’s Brad Garlinghouse are even more hopeful, estimating an 80-90% chance of it becoming law by late April, and he’s encouraging banks to work together constructively. Senator Tim Scott, who chairs the Senate Banking Committee, has also publicly expressed optimism, stating he believes the legislation will pass before the midterm elections.

To understand the bigger picture of digital dollars – including how rules for stablecoins are developing worldwide and impacting the US discussion – BraveNewCoin has analyzed the CLARITY Act and the debate over returns earned on digital dollars. They’ve also released a report showing how Donald Trump’s increasing pressure on banks is changing the political landscape surrounding the bill.

A Family Business and a National Policy

The current situation is particularly sensitive and potentially explosive because the Trump family’s business dealings are so closely connected to the potential outcome of this policy debate. Specifically, Eric Trump co-founded a cryptocurrency company, World Liberty Financial, which operates in the very areas – stablecoins and decentralized finance – that the proposed CLARITY Act would oversee. When asked about a recent post by Eric Trump, a company spokesperson stated that World Liberty Financial is not involved in politics and that Eric Trump has openly explained his reasons for starting the company.

The big question is whether the White House can turn its efforts into a finalized law. As of now, the Senate Banking Committee hasn’t set a new date to review the proposal, and both banks and cryptocurrency companies are waiting to see who will compromise first.

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2026-03-06 02:35