A Turning Point: Trump Administration Seeks to Resolve Major Dispute Over CLARITY Crypto Law

For months, there has been fierce fighting over one provision of the CLARITY law, which has paralyzed all legislative work on comprehensive digital asset regulation in America. By 2025, this situation reached a turning point: the administration began active negotiations with the cryptocurrency industry and the banking sector to break the legislative deadlock. The issue concerns provisions related to stablecoins and interest on them — a question that proved too complex for the usual legislative process.

Why CLARITY is stuck: twenty years of waiting for comprehensive regulation

The attempt to create unified rules for the US cryptocurrency market has been ongoing for two decades. During this time, many bills have been proposed, but none have been passed. The reason is simple: too many interests, too much uncertainty about which agency should oversee each area.

The CLARITY Act (The Clarity for Digital Currencies and Stablecoins Act) is one of the most serious attempts to solve this problem. Lawmakers are trying not just to set rules but to clearly delineate powers between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The House moved the bill relatively quickly, but when it reached the Senate, everything stalled.

The Senate Banking Committee intended to vote as early as summer 2024, but that did not happen. Instead, committee members spent months discussing amendments and revisions. Now, the process has come to a complete standstill: votes have been postponed multiple times, and there are signs that the bill may be stuck altogether.

Stablecoins and interest: the bottleneck blocking the entire law

All disagreements over CLARITY revolve around one section — Section 302. It addresses interest-earning programs on stablecoins pegged to the US dollar. Sounds specific? In reality, it concerns everyone who has ever earned interest on crypto platforms.

The core issue: are these interest programs investment products or just payment instruments? It may seem like a technical detail, but the answer determines which jurisdiction they fall under.

Pro-regulation stance: Stablecoins with interest function like money market funds. People invest expecting returns. Therefore, the SEC should regulate them as it does any investment product. Registration, audits, investor protections.

Crypto industry stance: Stablecoins are primarily a payment tool, not an investment. Interest earned on them is simply income from providing liquidity. Overregulation could kill innovation in digital payments. Flexibility is needed.

The Trump administration identified this conflict as the main obstacle to overcome. Without resolving this issue, the entire law remains in limbo.

Why banks are also opposed and why this complicates matters

It might seem that traditional banks should welcome any mention of crypto regulation — as it could slow down competitors. But the reality is more complex.

Banks want to participate in the crypto business, but only if clear rules are in place. Major banking associations actively lobbied for the CLARITY law because uncertainty hampers their ability to develop their own crypto services. They are ready for regulation; they already comply with AML (Anti-Money Laundering) requirements and understand these processes.

However, banks have expressed concerns about excessive compliance burdens and potential conflicts between the SEC and CFTC. They need clarity not only on what to do but also on who sets the rules.

An interesting point: banks emphasize that AML requirements should apply to all participants, including decentralized exchanges and custodial solutions. They do not want crypto platforms to receive special treatment not available to traditional finance.

What the crypto industry wants and why it’s hard to reconcile

Crypto companies, led by major exchanges, want one thing: regulatory clarity without stifling innovation. They advocate for differentiating types of digital assets based on their economic function, rather than classifying all as securities.

Industry priorities are clearly defined:

• Clear definitions of what asset belongs to which class (payment instrument, commodity, security)
• Transparent disclosure requirements about stablecoin reserves (people want to know what backs them)
• Reasonable timelines for existing players to adapt to new rules
• Coordination between agencies to prevent SEC prohibiting what CFTC permits
• International alignment so US companies don’t lose to global competitors

A particularly acute issue is potential fragmentation at the state level. Without federal legislation, all 50 states could set their own rules. Imagine having to comply with 50 different sets of requirements. That would kill innovation.

This is where the interests of the crypto industry, banks, government, and regulators diverge. The administration must find a compromise that doesn’t alienate anyone.

Why America needs rules: the global race for cryptocurrency leadership

US policymakers and businesses understand one thing well: they are losing time. While Washington argues, the rest of the world is moving forward.

The European Union has already implemented MiCA (Regulation on Markets in Crypto-assets) in 2024 — a comprehensive set of rules for all EU members. The UK is working on its financial legislation, including clear provisions on digital assets. Asian financial hubs — Singapore, Hong Kong, Dubai — have created progressive regulatory frameworks attracting crypto companies.

The predictable result: crypto firms are relocating operations to where rules are clear. If America doesn’t pass a clear law, it risks losing leadership in the digital economy. It’s not just about prestige. A 2024 study by the Digital Trade Chamber showed that comprehensive crypto legislation could generate over $180 billion in economic growth over five years.

180 billion dollars. Real money for real people. New jobs, new companies, new innovations. All could stay abroad if regulatory uncertainty persists.

The billions at stake if the law finally passes

Financial analysts are fairly optimistic about the economic potential of comprehensive regulation. Clear rules mean:

Inflow of institutional money: Large investment funds, pension funds, insurance companies avoid crypto due to uncertainty. One survey showed that asset managers are ready to increase crypto holdings once clear regulatory frameworks are in place. These are huge sums waiting in the wings.

Expansion of banking services: Traditional banks are ready to offer crypto services to their clients, but only when regulation provides clarity. This means greater integration of traditional finance and crypto.

Increased liquidity and stability: When more serious players enter the market, it becomes deeper and less prone to manipulation. Volatility decreases.

New innovations: Unclear rules kill innovation because no one wants to develop products that might be banned tomorrow. Clarity fosters innovation.

All this suggests that the law will pass. But the key is resolving the stablecoin interest dispute.

How to protect ordinary people without killing innovation

The CLARITY bill includes a whole section dedicated to consumer protection. This is important because the crypto market has already seen crashes (FTX, Terra).

Proposed requirements include:

• Minimum reserve requirements for companies holding crypto. If you promised people their Bitcoin is stored securely, it must be there — fully.
• Standardized disclosure of risks. People need to understand what risks they are taking.
• Enhanced audits of stablecoins. If a stablecoin is pegged to the dollar, it must truly be backed. Independent verifications are needed.
• Cybersecurity requirements to protect assets.
• Transparent fee disclosures. People should know what they pay.

Consumer protection organizations generally support these provisions but suggest adding:

• Clear explanations of conflicts of interest on crypto platforms
• Better education for retail investors (most people don’t understand what a stablecoin is)
• Even higher security standards for custody solutions

The ongoing debate: how to balance these requirements so as not to discourage companies from innovating while protecting consumers.

Where this is heading

Negotiations between the Trump administration and industry leaders signal that the CLARITY dispute may be resolved. The administration clearly considers this politically and economically important.

The most likely scenario: a compromise on stablecoin regulation with interest. Possibly, special requirements for interest-bearing stablecoins — less strict than for traditional securities but more than now.

If this happens, the law could pass in 2025. It would reshape the entire landscape of crypto regulation in America.

The question remains: will this make America a leader in the digital economy or will it continue to lag behind Europe and Asia?